-::iss^ 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 

Gift  of 
Howard  3uit 


A  TREATISE 


ON 


BUILDING  ASSOCIATIONS, 


ADAPTED    TO    THE    USE   OF 


LAWYERS  AND   OFFICERS. 


WITH    COMPLETE    SET    OF    FOEMS. 


By  CHARLES  N.  THOMPSON. 


CHICAGO: 

CALLAGHAN   &  COMPANY. 

1892. 


T 

T  372^3  k 


COPYEIGHTED  BY 

CALLAGHAN   &   COMPANY. 

1892. 


t 


PREFACE. 


My  purpose  is  to  give  an  authoritative  exposition 
of  tlie  law  of  building  associations,  in  such  concise  and 
clear  form  as  to  be  available  in  the  hands  of  both  lawyers 
and  persons  interested  in  the  subject  matter.  Consider- 
ing it  as  the  most  logical  and  satisfactory  method,  I 
have  started  with  the  building  association  in  its  prelimi- 
nary organization,  and  examined  its  career  through  to 
final  settlement  and  dissolution,  from  both  legal  and 
practical  standpoints.  It  is  my  intention  that  the  unpro- 
fessional reader  may  disregard  the  notes,  while  the  lawyer 
may  examine  the  authorities  therein  referred  to  as  sup- 
porting any  given  proposition.  It  is  believed  that  any 
work  citing  the  law,  to  acquire  the  confidence  of  the 
reader,  must  also  refer  to  the  authorities  supporting  the 
propositions.  The  only  law  book  in  the  United  States 
on  the  subject,  was  written  ten  years  ago,  and  since 
then,  statutory  enactments  of  the  different  states  have 
made  such   changes   as   to  justify   a   new   treatment. 

A  purpose  auxiliary  to  the  chief  one  has  been  to 
simplify  the  legal  status  of  a  building  association,  and 
to  avoid  the  application  of  some  more  or  less  complicated 
doctrines  maintained  by  some  courts.  In  sustaining  this 
purpose,  parts  of  the  book  will  appear  elementary  to  the 
lawyer. 


306197 


IV  PEEFACE. 

Some  years'  connection  with  building  associations, 
in  different  capacities,  has  given  me  an  opportunity  to 
observe  their  practical  workings.  Suggestions  of  remedies 
for  their  needs,  are,  therefore,  the  outgrowth  of  these 
observations. 

No  attempt  has  been  made  to  give  tables  for 
apportioning  or  declaring  dividends.  It  is  mathematics, 
as  in  any  other  calculation,  and  while  there  have  been 
many  ingenious  labor  saving  tables  invented,  there  is  no 
unanimity  as  to  their  perfect  accuracy.  Each  secretary, 
generally,  has  his  own  method,  borrowing  some,  perhaps, 
from  other  systems  and  adding  his  own  notions,  and  the 
variation  in  the  results  obtained  is  but  slight.  The  forms 
have  been  prepared  after  examining  those  in  use  in  the 
different  states.  I  desire  to  acknowledge  the  kindly 
assistance  of  Mr.  Charles  E.  HoUoway,  of  Indianapolis, 
in   securing   those   forms, 

0.  K.  T. 

IlTOIANAPOLTS, 

August  1st,  1892. 


TABLE  OF  CONTENTS. 

CHAPTER  I. 
mTRODUCTIOK 

Section  1.    Origin  of  Building  Associations .._.. 

Section  2.  Definition  of  Building  Associations 

Section  3.     General  Scheme.... .___ - ... 

Section  4.    Different  Types i — . 

CHAPTER  II. 
PKELIMINAEY  ORGANIZATION". 

Section  1.     Preliminary  Agreements ... 

Section  2.    Agreements  Legally  Considered 

Section  3.    Articles  of  Incorporation 

Section  4.     Corporate  Name 

Section  5.    Preparation  of  Corporate  Articles 

Section  6.     Conformity  with  Creative  Law 

Section  7.    Procedure  after  Registration 


CHAPTER  III. 
CHARTER. 


Section  1.  Importance  of  Charter. ._ 

Section  2.  Must  generally  adhere  to  Statute — 

Section  3.  What  Constitutes  Charter  and  its  Legal  Effect. 

Section  4.  Effect  of  Failure  to   Observe  Statute 

Section  5.  Construction 

Section  6.  Amendment 

Section  7.  Corporate   Seal 

V 


VI 


Section 

1. 

Section 

2. 

Section 

3. 

Section 

4. 

Section 

5. 

Section 

6. 

Section 

7. 

Section 

8. 

Section 

9. 

Section  10. 

TABLE  OF  CONTENTS. 

CHAPTER  IV. 
MEMBERS. 

Effect  of  Incorporation 

Membership  Qualifications 

Purposes  of  Membership .- 

Purpose  not  Material 

Right  to  Borrow — 

Right  to  Withdraw 

Certificate  of  Stock  and  Passbooks 

Member  Estopped  to  deny  Incorporation -— 

Illegal  to  invest  Funds  in  Other  Corporations ..-_. 

Death  of  Stockholder * 


Section 

1. 

Section 

2. 

Section 

3. 

Section 

4. 

Section 

5. 

Section 

6. 

Section 

7. 

Section 

8. 

Section 

9. 

CHAPTER  V. 
BY-LAWS. 

Framing  and  Adoption 

Definition.    Power  to  Enact  and  Amend. 

Notice  of  Amendment.... 

Character  of  By-Laws 

Construction  of  By-l^aws 

Amendment  of  By-Laws 

Resolutions  and  Amendment 

Mode  of  Amendment 

Provisions  of  By-Laws 


Section 

1. 

Section 

2. 

Section 

3. 

Section 

4. 

Section 

5. 

Section 

6. 

Section 

7. 

Section 

8. 

Section 

9. 

Section  10. 

Section  11. 

Section  12. 

CHAPTER  VI. 
GOVERNMENT  AND  OFFICERS. 

Officers  and  Election 

Pass-books  and  Dues 

General  Meetings - 

Special  Meetings 

Quorum,  Voting  and  Proxies 

Objects  of  General  Meetings 

Character,  Duty  and  Liability  of  Directors 

General  Guidance  for  Directors 

Minutes  of  Meetings 

Powers  of  Directors 

Term  of  Election  of  Directors 

Duties  of  President 


TABLE  OF  CONTENTS. 


vn 


Section  18.  Duties  of  Vice-President . . . 

Section  14.  Duties  of  Secretary 

Section  15.  Duties  of  Treasurer . 

Section  16.  Duties  of  Attorney 

Section  17.  Appraising  Committee 

Section  18.  Percentage  of  Value  to  be  loaned . ...... 

Section  19.  Executive  Committee - 

Section  20.  Auditing  Committee . .. 

Section  21.  OflBcers'  Bonds ... 

Section22.  Sureties  on  Official  Bonds.. 

Section  23.  Resignation  and  Removal  of  Directors _ 

Section  24.  Officers'  Relations  and  Responsibilities  to  the  Association. 

CHAPTER  VII. 
POWERS. 


Section 

1. 

Section 

2. 

Section 

3. 

Section 

4. 

Section 

5. 

Section 

6. 

Seation 

7. 

Section 

8. 

General  Powers , 

Implied  Powers.... 

Powers  of  Agents... ... 

Power  to  Sue 

Power  to  Compromise  with  Shareholders 

Power  to  Loan  Money 

Power  to  hold  Real  Estate 

Power  to  issue  Stock  to  Another  Corporation. 


CHAPTER  VIII. 
RIGHTS  OF  MEMBERS. 


Section 

Section 

Section 

Section 

Section 

Section 

Section 

Section 

Section 

Section  10 

Section  11. 

Section  12 


Section  13. 
Section  14. 


Legal  Status  of  Members __ 

Preferential  Stock 

Paid  Up  Stock 

Members  and  Officers  must  observe  Rules 

Member's  Right  to  Inspect  Books - 

Member  as  an  Investor 

Payments 

Right  of  Withdrawal 

Manner  of  Withdrawal -- 

Legal  Status  of  Withdrawing  Member.. 

Liability  of  Withdrawing  Members 

Rights  of  Withdrawing  Members  of  Insolvent  Associa- 
tion   - -  

Right  to  Withdraw  Limited  to  Present  Funds 

Stock  Pledged  Cannot  be  Withdrawn 


VIII 


TABLE  OF  CONTENTS. 


Section  15.    Amount  Withdrawable ..... — — . 

Section  16.  Construction  of  B}'-Law3  Concerning  Withdrawals.. . 

Section  17.    Transfer  of  Shares .. 

Section  18.     Forfeitures....... --• 

Section  19.    The  Legal  Status  of  Member  as  Borrower , 

Section  20.    Duty  of  Association  to  Loan  its  Money — 

Section  21.     Selection  of  Borrower 

Section  22.    Methods  of  Premium  Charges 

Section  23.    Auction  Premiums — - 

Section  24.    Premium  Fixed,  Unchangeable 

Section  25.    Premiums  Chargeable  to  Maturity  Only - 

Section  26.    Formal  Application  for  Loan 

Section  27.    Appraisement — 

Section  28.    Abstract  of  Title 

Section  29.  Interest  Not  Collectible  on  Interest  and  Premium... 

Section  30.    Payment  of  Instalments 

Section  31.    Provisions  of  Note  or  Bond 

Section  32.    Provisions  of  Mortgage - 

Section  33.     Complaint  upon  Bond  or  Mortgage 

Section  34.    Loans  to  Outsiders 

Section  35.    Loans  to  Married  Women 

Section  36.    Mortgage  Covenants _. 

Section  37.    Application  of  Payments 

Section  38.    Assignment  of  Shares  as  Collateral  Security 

Section  39.  Payments  on  Stock  not  ipso  facto  payments  on  lean. 

Section  40.    Paymenti  on  Re-assigned  Stock 

Section  41.    Assigned  Shares  Cannot  be  Credited . 

Section  42.  Liability  of  Borrower  under  his  Mortgage  for  Losses. 

Section  43.    Acknowledgment  of  Mortgage 

Section  44.    Leases  by  the  Association 

Section  45.    Satisfaction  of  Mortgages 

Section  46.    Borrower  Entitled  to  Set  Oflf 

Section  47.    Amount  Payable  Upon  Foreclosure 

Section  48.    The  English  Rule 

Section  49.    Rule  Laid  Down  Upon  Voluntary  Re-paj-ment 

Section  50.    Uncertainty  of  the  Foregoing  Rules 

Section  51.    The  Natural  and  Logical  Rule 

Section  53.  By-Laws  should  Provide  for  Record  Cancellations... 

CHAPTER  IX. 

FINES. 

Section  1.  Necessity  of  Fines 

Section  2.  Must  be  Reasonable 

Section  3.  Stop  After  Foreclosure 

Section  4.  No  Interest  on  Fines 

Section  6.  Are  Lien  on  Stock 


TABLE  OF  CONTENTS. 


IX 


CHAPTER  X, 
USUIIY. 

Section  1.  Definition 

Section  2.  Premium  not  Usurious  as  Formerly 

Section  3.  Premiums  Authorized  by  Statute 

Section  4.  Wlien  Interest  is  not  Usurious 

Section  5.  Illegal  Interest  not  Recoverable  by  Association. 

Section  6.  May  be  Recovered  Back  by  the  Borrower 

Section  7.  A  Personal  Defense 

Section  8.  Rule  for  Officers 


CHAPTER  XI. 

POWER    OF    THE    ASSOCIATION     TO     BORROW 

MONEY. 

Section  1.  A  Practical  Aspect 

Section  2.  English  Authorities __. 

Section  3.  American  Authorities 

Section  4.  Weight  of  American  Authorities 

Section  5.  Implied  Povrer  to  Borrow 

Section  6.  Overdrawing  Bank  Account  is   Borrowing 

Section  7.  Resolution  to  Borrow 

Section  8.  The  Effect  of  Assigning  Mortgages 

Section  9.  No  Power  to  Sell  Its  Mortgages 

CHAPTER   XII. 
DISSOLUTION  AND  SETTLEMENT. 


Section 

1. 

Section 

o 

Section 

3. 

Section 

4. 

Section 

5. 

Section 

6. 

Section 

7. 

Section 

8. 

Section 

9. 

Section 

10. 

Section  11. 

Dissolution  when  all  Stock  is  Matured 

Other  Methods  of  Dissolution 

What  Acts  Will  Not  Dissolve 

Dissolution  by  Unanimous  Agreement 

Effect  of  Appointment  of  a  Receiver 

Final  Settlement  with  Members  and  Creditors. 

Settlement  Before  Maturity 

Assignment  for  Creditors 

Appointment  of  Receiver  amd   Winding  Up... 

Marshalling  of  Assets 

Liability  of  Stockholders 


X  TABLE  OF  CONTENTS. 

Section  12.    Liability  of  Borrowers  for  Debts ,,. 

Section  13.     No  Liability  for  Losses  under  the  Mortgages 

Section  14.     Liability  of  Withdrawing  Member 

Section  15.     Assets  to  be  Distributed  among  Borrowers  and  Non- Bor- 
rowers alike 

Section  16.     Consolidation  of  Associations 

CHAPTER  XIII. 

PRACTICAL  RESULTS. 

Section    1.    The  Character  of  a  Building  Association 

Section    2.    Method  of  Loans - 

Section   3.    Some  Results - 

APPENDIX. 
STATUTES  AND  CONSTRUCTION. 

FORMS  OF 

Agreement  for  Incorporation - 

Application  for  Membership - 

Articles  of  Association - 

Act  of  Incorporation - 

Stock  Certificate - 

Assignment --- - 

By-Laws - 

Application  for  a  Loan - 

Appraisers'  Report 

Rules - 

Mortgage  Note - -- 

Bond 

Mortgage - - — 

Transfer  for  Loans - 

Note 

Trust  Deed 

Insurance  Clause -- 

Bond 

Bond  Used  by  Pennsylvania  Associations - 

Mortgage  Used  by  Pennsylvania  Associations - 

Bond  Used  by  New  Jersey  Associations - 

Mortgage  Used  by  New  Jersey  Associations 

Mortgage  Used  by  the  Mutual   Home  Saving  and  Loan 

Association  of  Dayton,  Ohio — - 

Bank  Mortgage  Used  in  Massachusetts - 


TABLE  OF  CONTENXa  XI 


FORMS  OF 

Stock  Register 

Warrant 

Bank  Check 

Building  Agreement . 

Building  Specifications 

Indemnifying  Bond  Against  Liens. 

Contractor's  Waiver  of  Liens 

Sub-Contractor's  Waiver 

Bond  for  Secretary . 

Bond  for  Treasurer . 


..x  .  ^^'7  '^ 


TABLE  OF  CASES. 


A 

Page. 

Abbott  V  Building  Association,  1  Del.,  397 156 

Albright  V  Building  Association,  102  Pa.  St.,  411 17-53 

Allemania,  etc.,  Association  v  Mueller,  8  Bull,  97 93 

Allen  V  Curtis,  26  Conn.,  456 38 

Anderson  V  Cleburne,  etc.,  Association,  16  S.  W.  Rep.,  298 17 

Archer  v  Harrison,  3  Jur.,  N.  S.,  194 94 

Armitage  vWalker,  2  Jur.,  N.  S.,  13 67 

Ashland,  etc.,  Co.  v  Centralis,  etc..  Association,   9  Luz.  Leg.,  Reg.,  41 

(Pa.,) 44 

Association  v  Commonwealth,  2  Chest.,  546 156 

Association  V  Bollinger,  12  Rich.,  Eq.,  124 102-108 

Association  V  George,  3  W.  N.  C,  239 105 

Association  V  Kribs,  7  Leg  «&  Ins.  Rep.,  (Pa.,)  21 63 

AsBOciation  v  Neurath,  2  W.  N.  C,  95 105 

Association  V  Steele,  11  W.N.  C,  204 83 

Association  V  Wall,  7  Phila.,  189 125 

Athol,  etc.,  Co.  V  Carey,  116  Mass.,  471 ^ 11 

Atkinson  v  Bradford,  etc.,  Society,  L.  R.,  25  Q.  B.  Div.,  377 69 

Atwood  V  Dumas,  149  Mass.,  167 2-64 

Auld  V  Glasgow,  etc..  Society,  12  App.  Gas.,  197 81 

B 

Babcock  v  Middlesex,  etc..  Bank,  28  Conn.,  302 87-153 

Baltimore,  etc..  Society  v  Taylor,  41  Md.,  409 81-103-104-106 

Bank  V  Porter,  2  Watts,  141 91 

Bank,  etc.,  v  St.  John,  25  Ala.,  566-611 39 

Bank  of  Commerce's  Appeal,  73  Pa.  St.,  59 70 

Barker  V  Bigelow,  15  Gray,  130 86-87 

Barndt  V  Gruel,  4  Leg.  Gaz.,  388 54 

Barton  V  Enterprise,  etc.  Association,  114  Ind.,  226. 116-129 

Bates  V  Peoples',  etc.,  Association,  43  Ohio  St.,  655 25-103-156 

Bauer  V  Samson  Lodge,  102  Ind.,  262 29 

Baxter  V  Mclnty re,  13  Gray,  168 2-98-154 

Bechtoldv  Brehm,  26  Pa.  St.,  269 71-77 

Beoketv  Building  Association,  88  Pa.  St.,  211 157 

XIII 


XIV  TABLE    OF    CASES. 

Page. 

Bergman  v  St.  Paul,  etc.,  Association,  29  Minn.,  275 15-29-68 

Bexar,  etc.,  Association  v  Robinson,  78  Tex.,  1(53 105 

Bibb  Co.,  etc..  Association  v  Richards,  31  Ga.,  592 2  13-77-103 

Birmingham  v  Maryland,  etc..  Association,  45  Md.,  541 52-81-105 

Blackburn,  etc.,  Society,  V  Cunlifife,  20  Ch.  D.,  902 Ill 

Blake  V  Buffalo  Creek  R.  R.  Company,  56  N.  Y.,  485 42 

Blake  v  Wheeler,  18  Hun.,  496 48 

Booz'8  Appeal,  16  W.  N.  C,  365 128 

Booz's  Appeal,  109  Pa.  St.,  594 69 

Borchusv  Huntington,  etc.  Association,  97  Ind.,  180 82 

Border  State,  etc..  Association  v  Hayes,  61  Md.,  597 ..96  154 

Border  State,  etc.  Association  v  Hilleary,  68  Md.,  52 105 

Boston,  etc..  Company  V  Langdon,  24  Pick,  49 119 

Bowker  \?  Mill  River,  etc..  Association,  7  Allen,  100 103-120-124 

Brooks  V  Blackburn,  etc..  Society,  L.  R.  9  App.,  Cas.,  857 114 

Brownlie  V  Russell,  L.  R.,  8  App.  Cas.,  235 128 

Bryant  V  Cowart,  21  Ala.,  92 91 

Bucklee  V  Lordonny,  56  L.J.  Ch.,  437 128 

Buffalo,  etc.  Company  v  Gifford,  87  N.  T,  294 11 


Bu 

Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 
Bu 


ng  Association's  Appeal,  33  P.  L.  J.,  324 122 

ng  Association's  Estate,  12  W.  N.  C,  207 65 

ng  Association  v  Arbeiter  Bund,  6  Bull,  823 25-62 

ng  Association  V  Bayley,  1  Kulp,  215 88 

ng  Association  V  Building  Association,  100  Pa.  St.,  191 156 

ng  Association  V  Coleman,  89  Pa.  St.,  428 157 

ng  Association  V  Commonwealth,  98  Pa.  St.,  54 156 

ng  Association  v  Egger,  5  Bull,  752 93-97 

ng  Association  v  Eshelback,  7  Phila.,  189 88-125-156 

ng  Association  v  Gallagher,  3  L.  T.  N  S.,  101 87 

ng  Association  V  George,  3  W.  N.  C,  239 .86 

ng  Association  v  Groesbeck,  41  L.  I.,  Pa.,  16 87-101 

ng  Association  v  Hanlen,  7  Luz.  L.  Re.ir.,  165 157 

ng  Association  V  Henderson,  3  Bull,  386 ■ 70 

ng  Association  v  Hetzel,  103  Pa.  St.,  507 82 

ng  Association  V  Hoary,  8  Luz.  L.  Reg.,  180 157 

ng  Association  v  Hungerbuehler,  93  Pa.  St.,  258 88 

ng  Association  v  Goldbeck,  13  W.  N.  C,  24 42 

ng  Association  v  Jones,  2  L.  T.  N.  S.,  Pa.,  17 29 

ng  Association  V  Kelley,  1  Kulp,  9. 119 

ng  Association  v  Leyden,  1  Bull,  126 93 

ng  Association  v  Lyons,  2  Kulp,  409 82  104 

ng  Association  v  Mangan,  2  Kulp,  210 88 

ng  Association  v  McDermott,  2  Kulp,  203 ..83 

ng  Association  V  Mixell,  81  Pa.,  St.,  313 83 

ng  Association  V  Minnick,  1  Kulp,  513 62 

ng  Association  v  Morgan,  2  Kulp,  19 ....87 


TABLE    OF    CASES.  XV 

Page. 

Building  Association  v  Morganthal,  3  Pears,  343 17 

Building  Association  v  Raber,  11  Pliila ,  546 86 

Building  Association  v  Rice,  8  W.  N.  C,  12 83 

Building  Association  v  Roan,  9W.  N.  C,  15 86 

Building  Association  v  Robinson,  46  L.  1.,  Pa.,  5 22-30-82-156 

Building  Association  vRood,  2  Kulp,  Pa.,  246 87-93 

Building  Association  v  Rowe,  15  L.  I.,  45 88 

Building  Association  V  Scliuller,  3  W.  N.  C,  Pa.,  431 81-100 

Building  Association  v  Semiller,  35  Pa.  St.,  225 50-156 

Building  Association  v  Silverman,  85  Pa.  St.,  394 65 

Building  Association  v  Sperring,  106  Pa.  St.,  334 66-69 

Building  Association  V  Taylor,  13  W.  N.  C,  13 85 

Building  Association  v  Timmins,  3  Phila.,  209 77 

Burbridge  v  Cotton,  8  Eng.  L.  &  Eq.  R.,  57 76-103 

Burke  v  Home,  etc,  Association,  7  Bull,  114 79 

Burlington,  etc.,  Association  V  Heider,  55  Iowa,  424. 77-106 

c 

Callahan's  Appeal,  124  Pa.  St.,  138 98 

Carmody  V  Powers,  60  Mich.,  26 12 

Cason  V  Seldner,  77  Va.,  293 81-98-128 

Central,  etc.,  Association  v  O'Connor,  5  Bull,  853... 93 

Chapleo  V  Brunswick,  etc.,  Society,  L,  R.,  6  Q.  B.  D.,  696 109 

Cheesebrough  V  Millard,  1  Johns.  Ch.,  409 ..126 

Chester,  etc..  Company  v  Dewey,  16  Mass.,  94 24 

Chicago,  etc..  Society  v  Crowell,  C5  111.,  453 53-84 

Chillicothe,  etc.,  Association  v  Ruegger,  60  Mo.,  218 58 

Christian's  Appeal,  102  Pa.  St.,  184 123-128 

Christie  v  Northern  Counties,  etc..  Society,  L.  R.,  43  Ch.  Div.,  62 31-33 

Cincinnati,  etc.,  Association  v  Flach,  1  Cin.,  S.  C.  R.,  468 93 

Clarksville,  etc..  Association  v  Stephens,  26  N.  J.  Eq.,  351 77-84-85-100 

Citizens',  etc..  Association  v  Goriell,  34  N.  J.,  Eq.,  383 39 

Citizens',  etc..  Association  v  Lyon,  29  N.  J.  Eq.,  110 39 

Citizens',  etc.,  Association  v  "Webster,  25  Barb,  263 95-103-104 

Citizens',  etc..  Company  v  Uhler,  48  Md.,455 76 

City  Loan,  etc.,  Association  v  Goodrich,  48  Ga.,445 120 

City,  etc.,  Company  v  Fattv.  1  Abb.  App.  Dec,  347 95-104 

Coetmor,  etc.  Society,  51  L.  T.  253 110 

Colonial,  etc..  Company  v  Home,  etc..  Company,  Lim.,  33  L.  J.  Ch.,  741. .12 

Columbia,  etc..  Association  v  Bollinger,  12  Rich.  Eq.,  124 77 

Columbia,  etc..  Association  v  Dobbins,  15  L.  I.,  45 88 

Columbia,  etc..  Association  v  Crumb,  42  Md.,  192 54 

Commonwealth  v  Association,  2  Chest.,  189 156 

Commonwealth  V  CoUeu,  13  Pa.  St.,  133 119 

Concordia,  etc..  Association  v  Read,  93  X.  Y.,  474 82-84-103 

Conklin  v' People,  etc.,  Association,  41  N  J.,  20 —.42 


XVI  TABLE    OF    CASES. 

Page. 

Connolly  v  Building  Association,  6  W.  N.  C,  176 123 

Conrow  v  Spring  Garden,  etc..  Association,  21  Leg.  Int.,  109 186 

Cook  V  Henderson,  8  Rec.  (Ohio.,)  429 38 

Cook  V  Kent,  105  Mass.,  246 120-154 

Cooper  V  Asgociation,  100  Pa.  St., 402-156 

Craig  V  First  Presbyterian  Cliurch,  88  Pa.  St.,  42 38 

Criswell's  Appeal,  100  Pa.  St.,  488 113-124 

Cross  V  Peach  Bottom,  etc.,  Company,  90  Pa.  St.,  392 19 

Cullerne  V  London,  etc..  Society,  L.  R.,  25  Q.  B.,  485 39-40 

Cunningham  v  Alabama,  etc..  Company,  4  Ala.,  652 70 

Curry  V  Bank,  8  Port.  Ala.,  360 30 


D 

Dartmouth  College  Case,  4Wheat,  518 16 

Davies  V  Creighton,  33  Grat,  696 157 

Davis  V  West  Saratoga,  etc.,  Union,  32Md.,  285 112 

Delano  V  Wild,  6  Allen,  1 2-77-103 

Delaware,  etc..  Association  v  Keller,  2  W.  N.  C,  29 86 

Delaware  R.  R.  Company  v  Tharp,  1  Houst.  Del.,  149 18 

Denny  v  West  Philadelphia,  etc.,  Association,  39  Pa.  St.,  154 _..72 

Diemer  v  Egolf,  1  Chest.,  55 - 86 

Dilzer  V  Building  Association,  103  Pa.  St.,  86 23 

Dobinson  v  Hawks,   12  Jur.,  10 37-24 

Doe  d  Morrison  V  Glover,  15  Q.  B.,  103 63 


E 

Early's  Appeal,  7  W.  N.  C,  184 .—.88 

Eastern,  etc.,  Company  v  Vaughan,  14N.  Y.,546 -U 

Eaton  V  American,  etc..  Association,  49  N.  W.  R.,  865 25 

Economy,  etc.,  Association  v  Hungerbuepler,  93  Pa.  St.,  2.58 125^ 

Edelin  V  Pascre,  22  Grat.,  326 80-124-128 

European,  etc.,  R.  R.  Company  v  Poor,  59  Me.,  277. 42 

Everham  v  Oriental,  etc,  Asscjciation,  47  Pa.  St.,  353 --84 

Everman  V  Schmitt,  34  Bull,  56. 89-128 

Eyre  v  Building  Association,  17  L.  I.,  Pa.,  143 33 

F 

Farlow  v  Kemp,  7  Blkf.,  544 H 

Farmer  V  Smith,  4  H.  &  N.,196 89  94 

Farmers',  etc.,  Bank  v  Downey,  53  Cal.,  466 42 

Faulkner's  Appeal,  11  W.N.  C, 48 56 


TABLE    OF    CASES.  XVII 

Page. 
Fleming  v  Self,  24  L.  T.  Rep.,  101 94 

Flounders  V  Hawley,  78  Pa.  St.,  45 79156 

Flynn  v  Saving  Fund,  37  L.  I.,  (Pa.,)  336 86 

Folger  T  Columbian,  etc.,  Company,  96  Am.  Dec,  757 119 

Forrest  City,  etc..  Association  v  Gallagher,  25  Ohio  St.,  208 

29-80-lGO-10I-103-105-15« 

Fox  V  Cottage,  etc..  Association,  81  Va.,  677 93 

Franklin,  etc.,  Association  v  Marsh,  29  N.  J.  L.,  225 103 

Franklin,  etc.,  Association,  v  Mather  4  Abb.,  Pa.,  274 81-155 

Franklin  Avenue,  etc.,  Institution  v  Board,  etc.,  75  Mo.,  408 53 

Frederick  v  Corcoran,  100  Pa.  St.,  413 156 

Freeman  v  Ottawa,  etc.  Association,  114  111.,  182 71-78-140 

Friel  v  Association,  1  Leg.  Rec.  Rep.,  (Pa.,)  217 68 

Fuller  V  Salem,  etc..  Association,  10  Gray,  94 69 

Fulton  V  American,  etc.,  ABSOciation,  48  N.  W.  R.,  781 25 


G 

Galbraith  v  Building  Association,  43  N.  J.  Law.,  3S9 70 

Gerenfield's  Estate,  1  Chest,  356 86 

German,  etc..  Association  V  Metzger,  9  W.  N.  C,  Pa.,  204 54 

Germantown,  etc.,  Association  v  Sendmeyer,  50  Pa,  St.,  67 24 

Qermantown,  etc.,  Company  v  Fitler,  60  Pa.  St.,  124 71 

Glenn  v'Statler,  42  Iowa,  107 48 

Glynn  v  Home,  etc..  Association,  22  Kans.,  746 95 

Goodrich  V  City,  etc..  Association,  54  Ga.  98,123 124 

Gordon  v  Winchester,  etc..  Association,  12  Bush.,  110 73-77-106 

Gouchenour  v  Sullivan,  etc..  Association,  119  Ind.,  441 109 

Grangers',  etc..  Company  v  Kamper,  73  Ala.,  325 IS 

Grimes  T  Harrison,  28  L.  J.  Ch.,  23 803 


H 

Hagerman  v  Ohio,  etc..  Association,  25  Ohio  St.,  186 

10-29-30-79-84-93-95-100-101 

Haigh  V  United  States,  etc.,  Association,  19  W.  Va.,  792 65-98 

Hamilton,  etc..  Association  v  Reynolds,  5  Duer.,671 84 

Hammerslough  v  Kansas  City,  etc..  Association,  79  Mo.,  80 105 

Hampstead,  etc.,  Association  v  King,  58  Md.,  279 120-121 

Hand  v  Society,  etc.,  18  N.  Y.  Supl.,  157 41 

Handley  v  Farmer,  29  Beav.,  362 67-89 

Hanner  v  Greensboro,  etc.,  Association,  78  N.  C,  188 77-97 

Hanney  v  Building  Association,  16  W.  N.  C.,  450 _ 67 

Hansbury  v  Pfeifer,  35  L.  L,  395 15ft 


XVIH  TABLE    OF    CASES. 

Page 

Hardy  v  Metropolitan,  etc.,  Company,  L.  R.,  7  Ch.  App.,  427 57 

Harris'  Appeal,  18  W.  N.  C,  14 86 

Haskett  V  Flint,  5  Blkf.,  69 - H 

Hawkeye,  etc.,  Association  v  Blackburn,  48  Iowa,  385 105-106 

Hayes  V  Brubaker,  65  Ind.,  27 ■il 

Hazel,  etc..  Association  v  Groesbeck,  41  L.  I.,  16 84 

Heckman  v  Building  Association,  11  L.  Bar.,  110 156 

Heggie  V  Building,  etc.,  Association,  107  N.  C,  581 55-121 

Heintzelman  v  Driuds,  etc.,  Association,  36  N.  W.  Rep.,  10) 28 

Hekelnkaemper  v  German,  etc..  Association,  22  Kan.,  549.. 32-86-93-95-120 

Henderson  etc.  Association  v  Johnson,  88  Ky.,  191 106 

Henderson,  etc.,  Association  v  Johnson,  10  S.  W.  llep.,  787 71 

Henninghausen  T  Tisher,  50  Md.,  58J- 60-66-93 

Herbert  V  Kenton,  etc.,  Association,  11  Bush.,  296 77-106 

Herbert  v  Mechanic's,  etc..  Association,  17  N.  J.,  Eq.,  497 86-124-126 

Hinman  v  Ryan,  3  C.  C,  (Ohio,)  529.. 112-120-128 

Hoboken,  etc.,  Association  v  Martin,  18  N.  J.,  Eq.,  427 

11-59-86-93-95-103-123 

Hodges  V  New  England  Screw  Company,  53  Am.,  Dec,  637 38-39-40 

Holgate  V  Shutt,  L.  R.,  27  Ch.  D.,  111. 47 

Holmes  V  Smythe,  100  111.,  413 71-78140 

Holyoke,  etc.,  Association  V  Lewis,  27  Pac  R.,  872 31 

Home  Association  v  Boning,  7  Bull,  174 76-79 

Horton  v  Building  Association,  6  Bull,  141 91 

Hoskins  v  Mechanic's,  etc..  Association,  84  N.  C,  838 77-95 

Houser  v  Herman,  etc.,  Association,  41  Pa.  St.,  478 156 

Howard,  etc..  Association  v  Mclntyre,  3  Allen,  571 25 

Howlett's  Estate,  2  Chest,  511 8G-101 

Hughes' Appeal,  30  Pa.  St.,  471 88 

Hughes  V  Edwards,  9  Wheat,  489 01 

Hughes  V  Lay  ton,  10  Jur.  N.  S.,  513 51 

HughesvLayton,  33L.  J.,  M.  C,  89 56 

Hughes  V  Littlefield,  18  Me.,  400 48 

Humboldt,  etc..  Society  v  Wennerhold,  81  Cal.,  528 30-48 

Hunter  V  Sun,  etc.  Company,  26  La.  Ann.,  13 49 

Huntington,  etc..  Association  v  Melsoheimer,  14  W.  N.  C,  344 84 

Huylar  V  Craigin,  eie.,  Company,  40  N.  J.  Eq.,  393 62 


Illinois,  etc..  Company  v  Zimmer,  20  111.,  654 19 

Ingolby  V  Riley,  28  L.  T.  N.  8.,  55 101 

In  re  Cefn  Cilcen,  etc.  Company,  38  L.  J.,  Ch.,  78 114 

In  re  Blackburn,  etc.  Society,  24  Ch.  D.,  431 66-69 

In  re  Deveaux,  54  Ga.,  673 , 154 

In  re  Doncaster,  etc,  Society,  L.  R.  Eq,  158 89 


TABLE  OF  CASES.  XIX 

Page. 

In  re  Durham  Co.,  etc.,  Society,  25  L.  T.,  Rep.,  N.  S  ,83 57 

In  re  Durham,  etc..  Society,  L.  R.,  13  Eq.,  516 109 

In  re  Estate  National  Association,  9  W.  N.  C,  79 123 

In  re  German  Mining  Company,  23  L.  J.,  Ch.,  956 114 

In  re  Jreffeison,  3  Kulp,  308. 86 

In  re  Middlesbrough,  etc..  Society,  -54  L.  J.  Ch.,  593 101 

In  re  Mutual  Societj',  24  Ch.  D.,  425 69 

In  re  National,  etc.,  Society,  ex  parte,  Williamson,  L.  R.,  5  Ch.  App.,  309 

109 

In  re  Sunderland,  etc.,  Society,  24  Q.  B.  Div.,  394 68 

In  re  Victoria,  etc..  Society,  L.  R.,9Eq.,  605 109 

In  re  West  Riding  Society,   L.  R.,  43  Ch.  Div.,  407 128 


Jackson  V  Cassidy,  68Tex.,  283 105 

Jaclcson  V  Myers,  43  Md.,  452 112 

Jarrett  V  Cope,  68  Pa.  St.,  67 103156 

Johnson  V  Elizabeth,  etc..  Association,  104  Pa.  St.,  394. 83-93 

Jones  V  National,  etc..  Association,  94  Pa.  St.,  115 53-113 

Jungkuntz  v  Building  Association,  6  Bull,  428 68-140 


K 

Kansas  City,  etc..  Company  v  Sauer,  65  Mo.,  279 119 

Kelly  V  Accommodation,  etc..  Association,  2  Phila.,  337 88 

Kelly  V  Mobile,  etc..  Association,  64  Ala.,  501 _ 30 

Kilpatrick  v  Association,  119  Pa.  St.,  30 63 

King  V  Ashwell,  12  East,  22 31 

KingSGSsing,  etc..  Association  v  Roan,  9  W.  N.  C,  15 185 

Kisterbock's  Appeal,  51  Pa.  St,  483 40 

Knoblauck  v  Building  Association,  25  P.  L.  J,.  39 68 

Knoblauck  v  Robert  Blum,  etc..  Association,  25  Pitts.  L.  J.,  (O.  S.,)  39..  126 

Knox  V  Childersburg,  etc.,  Company,  86  Ala.,  180 10 

Koehler  v  Black  River  Falls,  etc.,  Company,  2  Black,  715 39 

Kreamer  v  Saving  Fund,  6  W.  N.  C,  207 88 

Kreamer  V  Springfield,  etc..  Association,  6  W.  N.  C,  207 135 

Kupfert  V  Uuttenberg,  etc.,  Association,  30  Pa.  St.,  465 88 


Laing  T  Reed,  L.  R.,  5  Ch.  App.,  4 109 

Lake  v  Security,  etc..  Association,  72  Ala.,  307 40 


XX  TABLE  OF  CASES. 

Page. 

Latham  v  Washington,  etc.,  Association  77  N.  C,  145. 77-103 

Laurel  Run,  etc,  Association,  v  Sperring,  3  Kulp.,  67 _ 66 

Laurel  Run,  etc..  Association  v  JSperring,  106  Pa.  St,  334 128 

Licking  Co.,  etc.,  Association  v  Bebout,  29  Ohio  St.,  252 103-156 

Lime  City,  etc..  Association  V  Wagner,  122  Ind.,  78 83 

Lincoln,  etc.  Association  v  Benjamin,  7  Neb.,  181 73-77 

Lincoln,  etc. ,  Association  v  Graham,  7  Neb.,  173 1 7-77-103 

Link  V  Building  Association,  89  Pa.  St.,  15 86-100-125-156 

Liquidators  of  the  Blackburn,  etc.,  Society^  v  Cuuliffe52  L.  J.  Rep.,  Ch.,92 

110-111-114 

Lister  v  Log  Cabin,  etc..  Association,  38  Md.,  115 73-76-89-95-124-120 

Loan  Company  V  Conover,  5Phila.,  18 112 

Looker  v  Wrigley,  L.  R.,  39  Q.  B.  D.,  397 110 

Lord  V  Essex  Building  Association,  37  Md.,  320 16 

Low  Street,  etc..  Association  V  Zucker,  48  Md.,  448 81-88-121 

Lucaa  V  Greenville,  etc..  Association,  22  Ohio  St.,  339. ..106 

Lynn  v  Association,  117  Pa.  St.,  1 99-100 


M 


Maguire  t  State,  etc..  Association,  63  Mo.,  344 155 

Manahan  V  Varnum,  77  Mass.,  405 154 

Manufacturers,  etc..  Company  v  Conover  5  Pbila.,  18 55 

Marble,  etc..  Association  v  Hocker,  3  Phila.,  494 156 

Martin  V  Nashville,  etc..  Association,  2  Cold,  418 73-77-102 

Ma.ssey  V  Citizens',  etc.,  Association,  22  Kan,  624 55-77-81-88-108 

Master  Stevedore's  Association  v  Walsh,  2  Daly,  14 71 

MattersonvElderfield,  4L.  R.,  Ch.,  207 97 

McCahan  v  Columbian,  etc.,  Association,  40  Md.,  226 16-30-93-95 

McGannonv  Central,  etc..  Association,  19  W.  Va.,  726 70-100 

McGowan  V  Savannah,  etc..  Association,  80  Ga.,  515 154 

McGrath  v  Hamilton,  etc.  Association,  44  Pa.  St.,  383 68-89-128 

McKenney  v  Diamond  State,  etc..  Association,  18  Atl.  Rep.,  905 28-64-67 

McKeown  v  Building  Association,  5  Bull,  52 20-33-122 

McLaughlin  v  Citizens'  Association,  62  Ind.,  264 103 

McNeall  v  Florence,  etc..  Association,  13  Stew.,  351 155 

Meal  v  Hiil,  16  Cal.,  145 48 

Mechanics  etc..  Association  v  Conover,  1  McCart,  219 88-86-87 

Mechanics,  etc..  Association  v  Meriden,  etc.,  Company,  24  Conn.,  159.. 83-105 

Mechanics,  etc..  Association  V  Wilcox,  24  Conn.,  147 83-103 

Melville  v  American,  etc.,  Association,  33  Barb,  103 103 

Memphis,  etc..  Company  v  Woods,  88  Ala.,  630 25 

Merrill  v  Mclntire,  13  Gray,  157 2-84-103 

Metropolitan,  etc..  Association  v  Esche,  75  Cal.,  513 48 

Michigan,  etc.,  Association  v  McDevitt,  77  Mich.,  1 16-23-38-59-63-74-85 


TABLE  OF  CASES.  XXI 

Page. 

Miller  V  Jefferson,  etc.,  Association,  50  Pa.  St.,  32 '■^^ 

Miller's  Estate,  2  Pears,  348 157 

Mills  V  Central,  etc..  Company,  481  N.  J.  Eq.,  1 15* 

Milk  V  Salisbury,  etc.,  Association,  75  N.  C,  293 73-77-103 

Minot  V  Curtis,  7  Mass.,  441 H 

Mobile,  etc..  Association  v  Robertson,  65  Ala.,  382 - 92 

Montgomery,  etc.,  Association  v  Robinson,  69  Ala.,  413 26-76-103 

Monumental,  etc,  Society  v  Lewin,  38  Md.,  445 30-100 

Morrison  v  Dorsey,  48  Md.,  461 11-25-29 

Morton,  etc.,  Co.  v  Wysong,  51  Ind.,  4 28 

Moses  V  O'Coee  Bank,  1  Lea  ,  398 39 

Mosley  V  Baker,  12  Jur.,  551 94 

Mowbray  V  Antrim,  123  Ind.,  24 44 

Moxon  V  Berkeley,  etc.,  Society,  59  L.  J.,  Ch.,  524 126 

Moye  V  Sparrow,  22  L.  T.,  Rep.  N.  S.,  154 109 

Murray  V  Scott,  9  App.  Cas.,  519 HI 

Muth  V  Dolfield,  43  Md.,  466 - 112 

Mutual,  etc.,  Association  v  Hammell,  43  N.  J.  L.,  78 - 45 

Mutual,  etc.,  Association  V  Meriden,  etc.,  Co.,  24  Conn.,  159 26-153 

Mutual,  etc..  Association  v  Tascott,  28  N.  E.  Rep.,  (111.,)  801 75-82 

Mutual  Savings,  etc.,  Association  V  Wilcox,  24  Conn.,  147 23-153 

National,  etc..  Association  v  Hubley,  34  Leg.  Int.,  6 lG8 

Neath,  etc..  Society,  v  Luce,  L.  R.,  43Ch.  D.,  158 Ill 

New  Haven,  etc..  Company  v  Chapman,  38  Conn.,  56 19 

Newm»n  v  Ligonier,  etc.,  Association,  97  Ind.,  295 82 

Newton  Tp.,  etc..  Association  v  Boyer,  15  Stew.,  273 155 

Nicely's  Estate,  3  Kulp,  47 - 82-104 

North   Hudson,  etc.,  Association  v  First  National  Bank,  47  N.  W.  R. 

(Wis.,)  300 113 

North  V  State,  107  Ind.,  356 119 

North  American,  etc..  Association,  v  Sutton  35  Pa.  St.,  463 25-86-125 

o 

Oak  Cottage,  etc.,  Association  v  Eastman,  31  Md.,  556 104-105 

Occidental,  etc..  Association  v  Sullivan,  62  Cal.,  39 1 34 

Ocmulgee,  etc..  Association  v  Thomson,  52  Ga.,  437 95-99 

Odd  Fellow,  etc..  Association  v  Hogan,  28  Ark.,  2t)l 53 

Oliver's  Estate,  1  Del.,  358 86 

Orangeville,  etc.,  Association,  v  Young,  9  W.  N.  C,  251 78 

O'Rourke  v  Building  Association,  8  W.  N.  C,  176 156 

Overby  v  Fayetteville,  etc.,  Association,  81  N.  C,  56 77-95-98 

Owen  v  Roberts,  57  L.  T.  N.  S.,  81 Ill 


XXII  TABLE  OF  CASES. 

Page. 


Paffert  V  Building  Association,  25  P.  L.  J.,  40 68 

Pangborn  V  Citizens',  etc.,  Association,  1  Stock,  o41 42 

Parlier  V  Butcher,  L.  R.,  3  Eq.,  763 100 

Parlier  V  Fulton,  etc.,  Association,  46  Ga.,  106 77-103 

Parker  V  United  States,  etc.,  Association,  19  W.  Va.,  744 29-80-100 

Patterson  V  Albany,  etc..  Association,  63  Ga.,  373 77 

Patty  V  Pease,  8  Paige,  277 126 

Payette  V  Free  Home,  etc..  Association,  27  111.  App.,  307 16-17 

PeoplevLowe,  117N.Y.,  175 23-42-60-98-128 

People,  etc..  Association,  v  Furey,  20  Atl.  R.,  890 60-87-155 

People,  etc.,  Associationv  Wroth,  43  N.  J.  L.,  70 45-48 

People's,  etc.,  Bank  v  Collins,  27  Conn.,  143 86-106 

Perrin  v  Granger,  30  Vt,  595 71 

Peters,  etc.,  Association,  v  Jaecksch,  51  Md.,  198 120 

Pfaff  V  Building  Association,  6  W.  N.  C,  349 119 

Pfeister  v  Wheeling,  etc..  Association,  19  W.  Va.,  676 73-80-83-100-157 

Philadelphia,  etc..  Association  v  Moore,  47  Pa.  St.,  233 87 

Philadelphia,  etc..  Association  V  Moore,  21  Leg.  Int.,  109 156 

Philanthrophic,  etc..  Association  v  McKnight,  35  Pa.  St.,  470 105 

Phillips  V  Columbia  City,  etc.,  Association,  53  Iowa,  719 105 

Phillipsburg,  etc.,  Associationv  Hawk,  27  N.  J.  Eq.,  355 86 

Pooch  V  Lafayette,  etc..  Association,  71  Ind.,  357 51-83 

Premium  Fund  Association's  Appeal,  26  Pa.  St.,  156 71 

Provident,  etc.,  Society,  v  Greenhill,  L.  R.,  9  Ch.  D.,  122 101 

Q 

Quakertown,  etc,  Association  v  Sorver,  33  Leg.  Int.,  (Pa.,)  359 ..126 

Quein  V  Smith,  108  Pa.  St.,  335 49-113 

R 

Red  Bank,  etc.,  Association  v  Patterson,  37  N.  J.,  Eq.,  223. .73-103-104-125 

Redmond  v  Dickerson,  1  Stock,  507 42 

Redwine  v  Gate  City,  etc..  Association,  54  Ga.,  474 13-154 

Reeve  v  Ladies,  etc,  Association,  Ark.  Supct.  June  25,  1893 78 

Reg.  V  Registrar  of  Friendly  Society,  L.  R.  Q.  B.,  741 37 

Reg.  V  Grinishaw,  10  Q.  B..  743 37 

Reg.  V  Pratt,  118  Eng.  C  L..  (6  B.  &  S.  Q.  B.,)  673. 37 

Reilly  V  Mayer,  1  Beas,  (N.  J,)  55 126 

Reiser  V  William  Tell,  etc,  Association,  39  Pa.  St.,  137 77 

Remington  V  King,  11  Abb.  Pr.,  278 155 

Rhoads  V.  Hoernerstown,  etc..  Association,  82  Pa.  St.,  180 56156 

Richards  v  Bibb  Co.,  etc..  Association,  24  Ga.,  198 95 


TABLE  OF  CASES.  XXIII 

Page 

Risk  V  Delphog,  etc,  Association,  31  OhioSt.,517 80-95 

Roberts  V  Price,  16  L.  J.  C  P.,  169 48 

Robertson  v  American,  etc.,  Association,  10  Md.,  397 76-83-93-95-103 

Robertson  V  Homestead  Association,  69  Am.  Dec,  151 22 

Robinson  v  Smith,  34  Am.  Dec,  213 39 

Rodgers  V  Building  Association,  7  W-  N.  C,  Pa.,  95 39 

Roseobaclc  v  Salt  Spring,  etc.,  Banli,  53  Barb,  506 71 

Rosenberg  V  Northumberland,  etc.  Society,  L.  R.,  23  Q.  B.,  373 128 

Rushville  Gas  Company  v  City  of  Rushville,  131  Ind.,  .HiG 38 

Rowland's  Estate,  1  Del.,  98 . 156 

s 

Salem  V  Mill  Dam  Co.,  6  Pick.,  23 18 

Salina,  etc,  Association  v  Nelson,  23  Kans.,  75 1 154 

San  Buenaventura,  etc..  Company  V  Vassault,  50  Cal.,  534 .37 

Saving  Fund  v  Cake,  3  Leg.,  Rec,  Rep.,  173 87 

Saving  Fund  v  Longshore,  8  Luz.  L.,  Reg.,  199 83-157 

Saving  Fund  V  Murray,  14  Leg.,  Int.,  133 88 

Savings  Fund  V  Young,  9  W.  N.  C,  351 78 

Savings  Association  V  Vandervere,  3  Stock,  383. 155 

Savings,  etc.,  Association  v  Stevens,  5  Bull,  113 79 

Schlesinger's  Estate,  1  Law  Times,  N.  S.,  15 85 

Schober  V  Accommodation,  etc.  Association,   35  Pa.  St.,  323 50-88-156 

Schutte  V  California,  etc.,  Association,  23  Atl.,  Rep.,  836 63 

Seagrave  V  Pope,  15  Eng.  L.  &  Eq.,  477 76 

Seagrave  V  Pope,  22  L.  J.  Ch.,  258 94 

Second  Manhattan,  etc..  Association  v  Hayes,  3  Keyes,  192 155 

Security,  etc.,  Association  V  Lake,  69  Ala.,  456 69-73-76 

SeibelvBuilding  Association,  43  Ohio  St.,  371 60-98-123-128 

Seldenv  Building  Association,  2  W.  N.  C,  481 86 

Selden  V  Reliable,  etc..  Association,  33  P.  F.  Smith,  336 105-135-157 

Shaefer  v  Amicable,  etc..  Company,  47  Md.,  126. 54 

Shaffrey  V  Workingmen's,  etc.,  Association,  64  Ind.,  100.. 103 

Shannon  V  Dunn,  43  N.  H.,  194 77-103 

Shannon  V  Howard,  etc,  Association,  36  Md.,  383 76-81-95-99-100 

Sheldon  V  Mayor,  etc.,  30  Ala.,  540 30 

Sherman,  etc..  Association  v  Hock,  9  Phila.,  75 157 

Shibley  V  Angle,  37  N.  Y.,  626 11 

ShieldsvOhio,  95U.  S.,319 18 

Shinn  V  State,  32  Grat.,  899 ..49 

Siburn  v  Pearce,  L.  R.,  44  Ch.  D.,  854 66 

Silver  V  Barnes,  6  Bing.,  N.  C,  180 76-103 

Simpson  v  Building  Association,  38  Ohio  St,  349  17 

Skinner's  Estate,  4  Phila.,  189 105 

Small  V  Smith,  L.  R.,  10  App.,  Cas.,  119 50 


XXIV  TABLE  OF  CASES. 

Page. 

Smith  V  Los  Angeles,  etc.,  Association,  78  Cal.,  289 43 

Smith  V  Mechanics,  etc,  Association,  73  N.  C,  373 77-81-84 

Smith  V  Pilkington,  4  Jur.,  N.  S.,  58 94 

Smith  V  Plank  Road  Co.,  30  Ala.,  650 11 

Snider's  Estate,  34  Leg.,  Int,  49 156 

Somerset  Co.,  etc.,  Association,  V  Vanderv^ere,  3  Stock,  383 95 

Stile's  Appeal,  95  Pa.  St.,  133 78 

Sparrow  v  Farmer,  36  Beav.,  511 89 

Sperring's  Appeal,  71  Pa.  St.,  11 40 

Spinning  v  Home,  etc..  Association,  36  Ohio  St.,  483 18 

Spring  Garden  Association  v  Tradesmen's,  etc..  Association,  46  Pa.  St.,  493 

86-125-156 

Springviile,  etc..  Association  V  Raber,  33  Leg.,  Int.,  Pa.,  329 87-125-156 

State  V  Bonnell,  35  Ohio  St.,  10 37 

State  V  Building  Association,  35  Ohio  St.,  2.58 50-55-113-156 

State  V  Greenville,  etc..  Association,  39  Ohio  St.,  93 78 

State  V  McGrath,  95  Mo.,  193 15-155 

State  V  Oberlin,  etc.,  Association,  35  Ohio  St.,  258 83 

State  V  Redwood  Falls,  etc.,  Association,  45  Minn.,  154 68-69-155 

State  V  Rohlffs,  19  Atl.  R.,  1 .99-38 

State  V  Washington,  etc.,  Company,  11  Ohio,  96 18 

State,  etc.,  Association  v  Kellogg,  63  Mo.,  540 90 

Stebbins  V  Merritt,  10  Cush.,  27 37 

Stein  V  Indianapolis,  etc.,  Association,  18  Ind  ,  337 53-106 

St.  Joseph,  etc..  Association  v  Thompson,  19  Kans.,  321. _ 83-105 

St.  Louis,  etc.,  Association  v  Augustin,  3  Mo.  App.,  123 103-119 

Stohr  V  San  Francisco,  etc.,  Society,  83  Cal.,  557 31 

Strohenv  Association,  115  Pa.  St.,  373 124-12S 

Sturges  V  Crowninshield,  4  Wheat,  123 19 

Stuyvesant  V  Hone,  1  Sandf.,  (N.  Y.,)  419 126 

Sullivan  V  Lewiston  Institution  of  Savings,  56  Me.,  507 .'.39 

Sunbury,  etc..  Association  v  Martin,  1  Luz.,  L.  Reg.,  147 86 

Swentzel  V  Penn.  Bank,  23  Atl.  1  Rep.,  405 39 

T 

Tanner's  Appeal,  95  Pa.  St.,  118 83 

Tascottv  Mutual,  etc..  Association,  37  111.,  App.,  274 75 

Taylor  v  Collin.s,  46  L.  T.,  Rep.,  N.  S.,  168 63 

Texas,  etc..  Association  v  Kerr,  13  S.  W.  Rep.,  1 20-66 

Third  Ward,  etc..  Association  v  Lotze,  11  Bull.,  285 9 

Thompson  Y  Gillison,  38  S.  C,  534 108 

Thompson  v  Ocmulgee,  etc..  Association,  56  Ga.,  350 130 

Tosh  v  North  British,  etc..  Society,  11  App.,  Cas.,  489 138 

Twin-Lick  Oil  Company  v  Marbury,  91  U.S.,  587 43 

Tyrrell,  etc.,  Association  v  Haley,  30  Atl.,  R.,  1 63-82 


TABLE  OF  CASES.  XXV 

Page. 

Tyrrell,  etc.,  Association  v  Haley,  139  Pa.  St.,  476 92 

Tyrrell,  etc.,  Association  v  Haley,  139  Pa.  St.,  657 73 

u 

Union,  etc..  Association  v  Masonic  Hall  Association,  2  Stew.,389.. 04-55-81-101 
Uniontown  etc.,  Association's  Appeal,  92  Pa.  St.,  200 126 


Valley  Bank,  etc.,  Institution  v  Savings  Society,  28  Kan.,  423 119 

Vann  v  Fayetteville,  etc.,  Association,  75  N.  C,  494 77 

Vanneman  v  Swedesboro,  etc,  Association,  15  Stew.,  263 155 

Vermont,  etc.,  Company  v  Whithed,  49  N.  W.  Rep.,  318 105 

Vos  V  Cedar  Grove,  etc.,  Association,  9  Bull.,  194 56 

w 

Walker  V  British,  etc..  Association,  21  L.  J.  Q.  B.,  257 45 

Walker  v  General  Mutual,  etc..  Society,  L.  R.,  36  Ch.,  Biv.,  777 786-66 

Walton  V  Edge,  L.  R.,  10  App.  Cas.,  33 69 

Wangerien  v  Aspell,  47  Ohio  St.,  250 18-20-55 

Washington,  etc..  Association  v  Beaghen,  27  N.  J..  Eq.,  98 SS- 125-126 

Washington  Association  V  Creveling,  10  Vr.,  465 155 

Waterlow  v  Sharp,  L.  R.  8  Eq.,  501 114 

Watkins  v  Building  Association,  97  Pa.  St.,  514 87 

Watkins  v  Workingmen's,  etc..  Association,  10  W.  N.  C,  414 l 87 

Watkins  V  Workingmen's,  etc.,  Association,  97  Pa.  St.,  514 95-97 

Watson  V  Aildn,  55  Tex.,  536 105 

Waverly,  etc..  Association  v  Buck,  64  Md.,  388 95-103 

Weise  v  San  Francisco,  etc.,  Society,  82  Cal.,  646 31 

Weiss' Appeal,  5  W.  N.  C,  (Pa.,)  42S 125 

West  Winstead,  etc..  Association  v  Ford,  27  Conn.,  282 103-153 

Whilden  V  Broomall,  1  Del.,(Pa.,)  142 86 

White  V  Mechanic's,  etc..  Association,  22  Grat-,  243 .73-85-103-121 

Wiggins'  Appeal,  100  Pa.  St,  158 83 

Wilkowskiv  Hall,  95  Am.,  Dec,  374 91 

Wm.  Tell,  etc,  A.ssociation,  39  Pa.  St.,  137 103 

Williamson  V  Kokomo,  etc..  Association,  89Md.,389 16-17 

Williar  v  Baltimore,  etc.,  Association,  45  Md.,  546 77-103-105 

Wilson  V  Tucker,  3Stark.,  154 45 

Wilson's  Case,  L.  R.,  12  Eq.,  521 110 

Winchester,  etc  ,  Association,  V  Gilbert,  23  Grat,  787 38-73-95-98 

Windibch  v  Korman,  5  Bull.,  364 93 


XXVI  TAELE  OF  CASES. 

Page. 

Windhorst  V  Building  Association,  7  Bull.,  29 156 

Winget  V  Quincy.  etc.,  Association,  128  111.,  67 17-25-40-140 

Windsor  v  Bandel,  40  Md.,  172 121-128 

Winterer  V  Building  Association,  44  L.  I.,  (Pa.,)  122 38-60-98 

Withers  V  Baird.  32  Am.,  Dec,  754 91 

Wittman V  Building  Association,  7  W.  N.  C,  80 65-128 

Wolbach  V  Lehigh,  etc.,  Association,  y4  Pa.  St.,  211 83 

Wolbach  V  Lehigh,  etc.,  Association,  4  W.  N.  C  ,  157 156 

Wood  V  Hoskin,  63  Wis.,  15 158 

Wood  V  Union  Gospel,  etc..  Association,  63  Wis.,  9 158 

Woodman  V  York,  etc.,  R.  R.  Company,  50  Me.,  549 52 

Wright  V  Deley,  4  H.  &  C,  209 66 

z 

Zabriskie  V  Hackensack,  etc.,  Company,  18  N.  J.,  Eq.,  178 19 


INDEX. 


Abstract  of  title  should  be  furnished 81 

Abstracter  may  be  an  officer 42 

Acceptance  formal,  of  resignation  of  director  unnecessary 48 

Acconnt,  how  stated  when  association  in  liquidation 120n 

Acknowledginient  of  mortgage,  who  may  take 90,91 

Actual  notice  to  association  of  subsequent  incumbrance,  effect  of  126 
Advancement  on  shares  is  a  loan 76  n,  77  n 

Agents,  directors  as 38,  89 

Directors  when  may  delegate  to- ^"41 

Contract  of,  when  may  be  rescinded 49 

When  may  be  removed — —  49 

Liability  of  association  for  acts  of 53 

When  may  delegate  powers 53  n 

Powers  of,  should  be  defined 52 

general  Powers  to  bind  association 52,  53 

Special  how  far  may  bind  association 53 

Agreement,  see  contract. 

Unanimous,  stockholders  may  wind  up  by 119 

To  take  shares,  nature  of 10,  11 

To  take  shares,  not  partnership 11- 

Building  form  of 226 

To  waive  liens  form  of 233,  234 

Amendment,  of  charter  by  legislative  authority 18 

When  legislature  may  amend 18 

Limits  of  legislature  power  to  amend — 19 

Mode  of  amendment 19 

Of  by-laws 01,32,33 

Of  resolutions 32 

Amonnt  payable  on  foreclosure,  natural  and  logical  rule 96,  97 

Recoverable  on  foreclosure  under  the  English  rule 94 

Recoverable  on  foreclosure  under  rule  of  "possible  duration  " 98 

Recoverable  on  withdrawal 66 

To  be  paid  on  withdrawal 65,  69 

XXVII 


XXVIII  REFERENCES    TO    PAGES. 

Application  for  loan 79 

For  loan,  form  of 170 

Of  payments 84 

Of  stock  payments  by  borrower,  eilect  of b8 

For  membership,  form  of 158 

Appraisers  cannot  delegate  powers... 53  n 

Sealed  report  of 46  n 

Re  port,  form  of 184- 

May  beoflScers 42 

Appraising  committee 3,  46,  80 

Arbitration,  by-laws  may  provide  for 29 

Articles  of  association,  see  charter. 

Of  incorporation 11,  12 

Assessment  on  stock 127 

Assets,  what  are 89,  126  n 

To  be  distributed  when 121 

How  distributed 129 

Should  be  equally  distributed 60 

Distribution  of,  upon  dissolution 120 

Assignment  of  stock  without  transfer  on  books,  effect  of 70 

Of  stock  as  collateral  security 85 

Form  of 193 

Of  shares  as  collateral  security,  effect  of 85 

For  creditors -. 123 

For  creditors  does  not  prevent  judgment 123 

Association  plan  of 5 

Assigned,  shares  cannot  be  credited  on  loan 88 

Assigning  mortgages,  effect  of 115 

Assignment  of  mortgage Ill,  112,  113 

Attorney,  duties  of 45 

Liability  of 45 

Auction  sale  of  money 74,  77 

Auditing  Committee,  appointment  of 47 

Character  of - 47 

Report  of  impeachable  when 47 

Avoiding  usury.     See  Usury 

Bailee,  Treasurer  is  only 45 

Bank,  account,  overdrawing 114 

Check,  form  of • 225 

Banking,  Association  should  notengage  in 50 

Bidding - - 78 

For  preference 74 

Bill  to  foreclose  mortgage,  fines  do  not  stop  upon  filing 101 


REFERENCES    TO    PAGES.  XXIX 

Bond,  Secretary  and  treasurer  should  give 36,47 

Duty  of  directors  in  regard  to 47 

Sureties  responsibility  of,  how  ascertained 47,  48 

Sureties  discharge  of 48 

liability  of 48 

Effect  of  failure  of  surety  to  read  bond... 48 

Form  of 188,  200,  202,  211,231,  234,  235 

Not  void  for  uncertainty 83 

Provisions  of ^ 48,81 

May  be  deposited  as  collateral  security 112 

Books,  Inspection  of  by  members 62 

Borro"friiig,  Illegal  prior  to  1874  in  English  societies  without  a  rule.. 
109, 110 

Unlimited  borrowing  held  ultra  vires _. 109 

When  limit  exceeded,  directors  liable 109 

For  illegitimate  purposes  not  enforceable 109 

For  legal  liabilities,  enforceable 109 

Borro'vv'ing  member  entitled  to  pro  rata  part  of  profits 60 

Status  of 71,  72,  73  n 

Selection  of __ 74 

Borrowing  money  by  association  ..107,  108,  109,  110,  111,  112,  113,  114 

115 

BorrOT^er,  Member  as 3 

Liability  of.... ..90,  127 

Must  pay  interest  during  suspension 120 

Not  further  obligated  if  association  is  unable  to  perform  its  contract 

121 

May  set  off  against  his  mortgage 92 

Defaulting,  amount  to  repay 96,97 

Repaying  amount  of  repayment 96,  97 

Cannot  recover  on  mistake  of  law 98 

Credit  entitled  to,  on  application  of  stock  payments 125 

Withdrawing,  credit  to  be  given 87 

May  pay  off  loan  and  retain  stock 87 

Not  liable  under  his  mortgage  for  debts  unless  so  provided. 88, 89, 128 

Liability  of,  for  losses 89,  90 

Cannot  defeat  loan  as  unauthorized 83 

Borroirer's  account  when  association  in  liquidation 120  n 

Building  agreement,  form  of 226 

Specifications,  form  of 227 

Building  Association. 

Origin  of 1 

Greenwich  Union  Building  Society .1 

Brookljm  Building  and  Mutual  Loan  Fund  Association 2 

Definition  of .. ..2 


XXX  REFERENCES    TO    PAGES. 

Building  Association. 

General  scheme  of 2 

Transfer  of  stock 3 

Maturing  of  stock 4 

Revenues  of 4 

Expenses  to  be  incurred 4,  10 

Officers  to  be  selected 4 

Compensation  of  officers 4 

Serial,  plan  of 5 

Value  of  shares _ 5 

Permanent,  plan  of . 6 

Organization  of 9 

Agreement,  preliminary 10 

Contract,  preliminary 10 

May  enforce  stock  subscriptions 10 

Use  of  seal ..20 

Modified  type  of  corporations 21 

DifEerent  from  ordinary  corporations 23 

Illegal  to  hold  stock  in  another  corporation 25 

Cannot  hold  stock  in  another 25 

Relation  of  stockholder  to 21 

Bound  to  lend  to  members 24 

Estopped  to  deny  membership 25 

Power  to  enact  by-laws ..28 

Power  to  amend  by-laws 31 

Contract  of,  how  signed 41 

Relation  of  officers  to 49 

General  powers  of , 50 

to  have  common  seal 50 

to  contract 50,  52 

to  hold  real  estate 50,  56 

to  sue  and  be  sued 50,  53 

to  make  by-laws 50 

to  compromise  debts  or  remit  fines 42,  55 

to  loan  money 55 

to  take  mortgages 1 55 

to  borrow  money.  107,  108,  109,  110,  111,  112,  113, 114,  115 

Has  incidental  powers  as  are  necessary 50 

Should  not  engage  in  banking 50 

Should  not  invest  in  securities  not  contemplated  by  statute 50 

Estopped  to  deny  ultra  vires  acts  when 51 

Not  dissolved  by  ultra  vires  acts  alone ,  ... 1.51 

Contracts  through  officers  and  agents 52 

How  far  bound  by  special  agent 52,  53 

Power  of  general  agent  to  bind 52,  53 

Liability  for  agent's  acts 53 

Complaint  by,  allegations  of 63,  54 


REFERENCES    TO    PAGES.  XXXI 

Bailding  Association. 

Cannot  traffic  in  notes 55 

When  may  issue  stock  to  another  corporation 56,  57 

May  sue  member  for  dues 63 

Should  make  loans 74 

May  sue  upon  either  bond  or  mortgage 83 

May  borrow  for  authorized  purpose 109,114 

Must  repay  unless  lender  knew  purpose  was  unauthorized. .112,  114 

No  power  to  sell  its  mortgages 116 

Unable  to  perform  contract,  borrower  not  obligated  further 120 

When  must  retire  stock 121 

May  sell  pledged  stock  as  against  purchaser 124 

Consolidation  of 129 

Character  of 132 

By  Bidding 74 

By-Laws. 

May  be  amended  by  directors 28 

Notice  of  amendments  should  be  given 28 

Character  of  notice 28 

Member  not  bound  by,  without  notice 28 

Association  has  power  to  amend 31 

Having  retroactive  effect,  apply  fully  unless  vested  rights  are 

impaired 33 

Mode  of  amendment,  as  prescribed  must  be  followed 33 

Stockholders  adopt 11 

Charter  should  not  invade 17 

Selection  of  committee  to  frame 27 

Report  of  committee,  time  and  place  of  hearing 27 

Character  of,  should  be  well  understood 27 

Each  shareholder  should  have  notice  of 27,  62 

Definition  of - 28 

Power  of  association  to  enact 28 

Power  to  enact  resides  in  stockholders 28 

May  provide  for  amendment  by  directors 28 

Notice  of  amendments  should  be  given 28 

Character  of  notice 28 

Member  not  bound  by  amendments  without  notice 28 

When  acted  upon  and  enforced  are  binding ..28 

Must  be  reasonable 29 

Must  not  be  contrary  to  public  policy 29 

Nor  attempt  to  oust  jurisdiction  of  courts 29 

May  provide  for  arbitration , 29 

Must  be  consistent  with  articles  of  incorporation  and  statute 29 

Cannot  provide  for  unreasonable  fines 29 

Cannot  compel  stockholders  to  offer  premium  for  priority  of 

payment  after  maturity  of  shares 29 

Member  cannot  deny  signing  by-laws  after  enjoying  benefits. ..29  n 


XXXII  REFERENCES  TO  PAGES, 

By-JLaws. 

Requiring  member  to  sign  an  obligation  to  obey  are  directory 2^ 

Are  part  of  contract  between  association  and  member 30 

May    be  examined  to  determine    wlien   mortgage  contract 

terminated 30 

Defining  duties  of  secretary,  part  of  surety's  contract 30 

Construction  of,  must  be  fair 80 

Consisting  of  several  distinct  and  independent  parts,  one  may 

be  void  and  the  others  valid ...30 

If  waived  by  association,  member  violating  them  cannot  com- 
plain  30 

Member  holding  a  greater  number  of  shares  than  allowed  by 
by-laws,  but  not  by  statute,  cannot  defend  against  a  claim 

thereon . » 30^ 

A  loan  not  in  conformity  with  by-laws,  but  under  an  express 

statutory  power,  is  not  void . .30 

Association  has  power  to  amend -.31 

May  be  amended  so  as  to  afEect  future  benefits  but  not  vested 

claims - — . . --31 

Illustrations  of  rule -- 31,  32  n 

Amendments  having  retroactive    effect,  apply  fully  unless 

vested  rights  are  impaired 32 

Resolutions  cannot  be  passed  so  as  to  impair  vested  rights 32 

Unwritten  regulations  when  acted  on  will  govern  if  reasonable-. 33 

Mode  of  amendment  as  prescribed  must  be  strictly  followed 33 

Should  not  be  incorporated  in  charter 33 

Should  be  kept  distinct  from  rules 33 

Provisions  of  by-laws 33 

Manner  of  election  of  officers  and  time  of  holding  to  be  pre- 
scribed by  by-laws — 36 

Should  fix  date  of  general  meetings  of  stockholders.... ^...37 

Should  provide  for  call  of  special  meetings 37 

Manner  of  election  of  officers  as  fixed  by  by-laws  to  be  strictly 

observed 48 

Should  provide  for  removal  of  officers , 49 

Power  of  association  to  make . — --50 

May  provide  for  custody  of  seal 51 

Member  after  enjoying  benefits  cannot  question  legality  of 63 

Should  provide  for  liability  of  withdrawing  member 67 

Construction  of,  concerning  withdrawal 69 

Should  provide  for  penalty  for  failure  to  take  loan 74 

Should  regulate  fines - -.101 

Form  of - 165 

California  Associations 144 

Call  for  special  meeting 37 

Cancelling  stock,  effect  of 131 


REFERENCES    TO    PAGES.  XXXIII 

Certificate  of  stock,  form  of 165 

How  issued 13,24,  36 

Cessation  of  all  corporate  acts  and  enterprises  does  not  dissolve 

the  Association ._ - • 119 

Change  of  permanent  to  serial 130 

Serial  to  permanent ..130 

Character  of  building  associations 133 

Charter. 

Preparation  of 11,12,  13,14,15 

Signing  of 12,  13 

Importance  of 14 

Legal  status  of  signers 14 

Must  adhere  to  statute - --15 

General  adherence  to  statute  sufficient 15 

Construed  by  patent  intent 15 

Corporate  objects  to  be  clearly  specified 15 

What  constitutes  charter ..15,  18 

Charter  amendable  to  the  constitution 15  n 

Relations  created  by  the  charter 15,  16 

Effect  of  charter  exceeding  legislative  authority 16 

Effect  of  failure  to  strictly  comply  with  statute 16 

Strict  compliance  with  statute  not  necessary 16 

Defects  in  oranization  cannot  be  collaterally  attacked 16,  17 

Effect  of  defects  impairing  legality  of  association 16,  17 

State  may  withdraw  charter  for  exceeded  powers 16 

When  courts  may  interfere  with  exceeded  powers — 17 

Corporate  functions  not  enlarged  by  assuming  unauthorized 


powers 


17 


Charter  should  not  invade  by-laws 17,33 

Construction  of,  is  one  of  intent 17 

Amendment  by  legislative  authority ..^ — 18 

When  legislature  may  amend 18 

Limits  of  legislative  power  to  amend 19 

Mode  of  amendment 19 

Impairment  of  contract... 19  n 

Mode  of  amendment  provided  in  charter  must  be  followed 20  n 

By  issuance  of  charter,  association  is  a  corporation .-..21 

By-laws  must  be  consistent  with — 29 

Providing  for  removal  of  officers 48 

When  may  be  annulled —  51 

Power  to  forfeit  in  state 119 

Form  of,  by  articles  of  association - 159 

Form  of,  by  special  enactment 163 

Collateral  attack,  when  acts  ultra  vires  are  subject  to 55 

Collateral  Security,  assignment  of  shares  as 82 

Form  of. 198 

Mortgages  and  bonds  may  be  deposited  as ..Ill,  112 


XXXIV  REFERENCES    TO    PAGES. 

Colorado    Associations 143 

Compensation  of  officers .• 4 

Committees 41,  42,  47 

Complaint  to  recover  on  withdrawal,  what  must  show 65 

By  associations,  allegations  of 53,  54,  83 

To  foreclose  mortgage,  fines  do  not  stop  upon  filing 101 

Compromise  of  debts 42,  55 

Of  debts  in  good  faith,  will  not  be  set  aside 55 

Computation  as  to  amount  upon  voluntary  repayment 94 

Of  amount  recoverable  on  foreclosure  under  rule  of  possible 

duration _. 93 

Consolidation  of  building  associations 129 

Constitution,  charter  amenable  to 15  n 

Construction  of  by-laws  must  be  fair .30 

By-laws  consisting  of  several  distinct  and  independent  parts, 

one  may  be  void  and  the  others  valid ...30 

Of  by-law  concerning  withdrawal 69 

Of  charter,  one  of  intent 17 

Conting^ent  fund 7 

Continuous  default,  when  averred 54 

Contr   ct.  To  take  shares 10, 11 

With  married  women 23 

By-laws  are  part  of,  between  association  and  member 30 

Mortgage  contract,  by  law  may  be  examined  to  determine  when 

terminated 30 

By  laws  defining  duties  of  secretary,  part  of  sureties'  contract 30 

Of  association,  how  signed _ . — 41 

Of  agent  may  be  rescinded,  when.. >. . 49 

Power  of  association  to  malse c50,  53 

Requiring  seal 53 

Misnomer  of  association  in,  effect  of 53 

To  insure,  breach  of 84  n 

Co-operative  banks 135,  139 

Form  of  mortgage  of — 216 

Corporation.  Relation  of  stockholders  to 21 

Association  cannot  hold  stock  in  another _ 25 

When  stock  may  be  issued  to 56,  57 

Corporate  acts  beyond  corporate  powers,  void 50 

name 11,  12 

Courts.  By-laws  must  not  attempt  to  oust  jurisdiction  of 29 

Cannot  remove  officers 48 

Will  not  relieve  against  authorized  forfeiture 48 

When  may  interfere  with  exceeded  powers 17 

Covenants  in  mortgage 84 


REFERENCES    TO    PAGES.  XXXV 

Credit  to  be  given  withdrawing  borrower,  how  ascertained 87 

Creditors,  assignment  for - — 123 

Cannot  compel  application  of  stock  on  loan 86,  125 

Of  association  must  be  paid  before  members 126 

Members  withdrawing  are 65 

Entitled  to  be  paid  first -- 124 

Members  may  be 60 

Daytou  Mutual  Home  Association 136,  137 

Mortgage  of,  form  of - 217 

Death  of  stockholder 26 

Dissolves  membership 26 

Of  stockholder  does  not  dissolve  association 119 

Debtor,  member  is  to  association 23  and  n,  63 

Debts,  compromise  of 42,  55 

Liability  of  borrower  for 127 

Must  be  discharged  before  division 121 

Liability  of  borrower  for,  under  his  mortgage 88,  89,  128 

Deed,  Trust,  form  of 194 

Defaulting  borrower  amount  to  repay 96,97 

Member  may  be  sued  on  bond  or  mortgage 82 

Member  entitled  to  share  in  profits ..122 

Member,  disposition  of 71 

Member,  tender  by 54 

Member  cannot  transfer  stock.. 70 

Default  of  other  members  does  not  relieve  one 59 

Deduction  of  premium 134 

Defects  impairing  legality  of  association — 16,  17 

In  organization  cannot  be  collaterally  attacked 16,17 

Definition  of  building  association 2 

Of  usury 103 

Delaware  associations 140 

Delegation  of  duties  to  agents  by  directors 41 

Of  powers  by  appraisers 53  n 

Delinquent  officers,  fines  against 99 

Deposits  authorized,  rights  of  depositors  over  members 113 

Devisees  as  members 25 

Directors.  To  be  selected.... 4 

Should  keep  within  corporate  powers 25 

Illegal  action  of,  may  be  restrained  by  stockholders 25 

May  amend  by-laws,  when 23 

Cannot  defeat  supreme  powers  of  stockholders  assembled  in 

general  meeting 36 

Should  furnish  stockholders  with  copy  of  report  of  association... 36 


XXXVI         REFERENCES  TO  PAGES. 

Directors. 

Meetings  of 87 

Have  supervision  and  management 38 

As  agents  and  trustees -.38,  39 

Duties  of - 39 

Liability  of 

For  fraud 89 

For  gross  negligence - 39 

For  ultra  vires  acts 39 

For  misapplication  of  funds - 39 

Not  liable  for  acts  of  co-director  when  not  present 39,  40 

Not  liable  for  mistake  in  opinion .39,40 

Rule  for  guidance  of 40,  41 

Minutes  of  meetings 41 

Powers  of 41 

Contracts  of 41 

Right  to  delegate  to  agents 41 

Personally  interested,  incompetent  to  vote - 42 

Cannot  speculate  in  funds 42 

Cannot  purchase  property  for  resale  to  association  at  a  higher 

figure - 43 

Cannot  make  secret  agreements  for  their  own  profit 42 

Duty  in  granting  loans - -> 42 

May  remit  fines  or  compromise  debts 42 

Term  of  election  of 42,  43 

Percentage  of  value  to  be  loaned  in  discretion  of 46 

May  appoint  executive  committee 47 

Should  require  bond,  when - 47 

Duty  of,  in  regard  to  bonds 47 

Election  of,  as  prescribed  by  by-laws,  to  be  strictly  observed 48 

Resignation  of „.. - 48 

Cannot  be  removed  by  stockholders - — 48 

Cannot  be  removed  by  courts 48 

May  remove  agent  holding  at  pleasure 48,  49 

May  remove  agent  under  contract,  when 49 

Removal  of,  should  be  provided  for  in  by-laws 49 

Should  understand  scheme  of  association 51 

Should  make  equal  distribution  of  assets 60 

Liability  of,  for  distributing  profits  contrary  to  law 60,  62 

Should  not  invest  funds  to  defeat  withdrawals 68 

May  give  dividends  to  stockholders  shown  by  the  books 70 

Grant  loans  on  appraisement 80 

Dissolution.  Ultra  vires  acts  alone  do  not  work 51,  56 

Rights  of  withdrawing  members  on 68,  69 

Dues  cease  upon 81 

Upon  maturity  of  all  stock 118 

Method  of 119 


REFERENCES    TO    PAGES.  XXXVII 

Dissolution. 

Neglect  to  elect  officers  does  not  dissolve  association 119 

Cessation  of  all  corporate  acts  and  enterprises  does  not  dissolve.  119 

Non  user  of  franchise  does  not  dissolve - ..119 

Insolvency  of  association  does  not  dissolve 119 

Death  of  stockholders  does  not  dissolve 119 

May  be  by  unanimous  agreement 119 

Agreement  of 122 

Tosuspend  and  close  up  business  is  not  dissolution 119 

Upon  agreement  must  be  unanimous 119  n 

Distribution  of  assets  upon .- ..120 

Appointment  of  receiver  operates  as  dissolution  as  to  pa3'ments-120 
If  association  is  unable  longer  to  perform  its  contract  it  is  in 

effect  dissolved  as  to  borrower 121 

Dividends,  How  credited 121,  122 

May  be  given  stockholders  shown  by  books 70 

Division  of  assets 121, 129 

of  profits 7 

of  profits  in  serial 122 

Distribution  of  assets 129 

of  assets  upon  dissolution 120 

Dnes  are  partial  payments  on  stock 24 

Payment  of  at  secretary's  place  of  business  when  valid 63 

Payment  of,  to  authorized  officer , 63 

Suit  for,  by  association 63 

Cease  on  appointment  of  receiver 120 

Cease  if  association  dissolves  before  maturity ..81 

When  payable 36 

Payable  to  maturity ..81 

Payable  as  stipulated 81 

Dnties  of  directors 39 

of  president 43 

of  vice-president .43 

of  secretary 43 

of  treasurer 44 

of  attorney .45 

Election  of  officers,  manner  of  to  be  strictly  observed 48 

of  directors,  term  of 42,  43 

Embezzlement,  when  secretary  or  treasurer  guilty  of 49 

Enabling  statute,  powers  conferred  by 83 

Engllsb  societies,  see  borrowing,  permanent  society 6 

Terminating  society 6,  118 

Entrance  fee  prerequisite  to  membership 21 


XXXVIII  REFERENCES    TO    PAGES. 

Estoppel.     Members  estopped  to  deny  incorporation 25 

One  receiving  membership  benefits,  estopped 25 

A  ssociation  estopped  to  deny  membership 25 

Embezzling  officers  estopped  to  deny  corporate  existence . 49 

Association's  right  to  contract. ,... . . 51 

Of  association  to  deny  its  right  to  make  contract ..51 

When  member  estopped  to  deny... 

Member  when  estopped  to  deny  legality  of  by-laws 62 

Borrower  cannot  defeat  loan  as  unauthorized 83 

Association  estopped  to  allege  want  of  power  to  borrow  for 

legitimate  purposes 112 

Association  cannot  defeat  recovery  of  money  borrowed  as  applied  to 

unauthorized  purposes,  unless  lender  knew  of  it 112 

Exclnsive  right  to  name 12 

Executive  committee,  appointment  of .47 

Committee,  duties  of 47 

Committee,  powers  delegated  to 41 

Expenses  to  be  incurred 4,  10 

Expert  accountants  selected  as  auditors 47 

Failure  to  transfer  stock  on  books,  effect  of 70 

Fees  of  appraising  committee 46  n 

Final  division  and  settlement,  when  required 121 

Fines.    Amount  must  be  reasonable _ 29,  100 

Delinquent  cannot  be  fined  twice  for  same  offense 29 

Must  be  provided  for  in  unambiguous  language 34  n 

Directors  may  remit 42 

Covenant  to  pay  enforceable 84,  100 

Necessity  of 99 

Against  delinquent  oflScer 99 

May  be  recovered  as  stipulated  damages 99 

Without  statutory  authority,  not  enforceable 100 

Can  only  be  collected  from  members _ 100 

May  be  charged  against  land 101 

Stop  after  decree  of  foreclosure 101 

Do  not  stop  on  filing  bill  to  foreclose 101 

No  interest  on _ 101 

After  decree  part  of  principal 101 

Are  lien  on  stock 101 

Foreclosure  of  Mortgage. 

Just  computation  ditiicult . 93 

Amount  recoverable  under  the  rule  of  "possible  duration" 93 

English  rule 94 

American   modification 94 

Uncertainty  of  above  rules 95 

The  natural  and  logical  rule 96 


REFERENCES    TO    PAGES.  XXXIX 

Forfeitores.    Must  be  created  by  unambiguous  language 34 

yiiould  be  omitted  when --34 

Must  be  autliorized  by  charter  or  statute _ --71 

In  declaring,  law  must  be  strictly  complied  with 71 

If  authorized,  courts  will  not  relieve  against 71 

No  notice  is  necessary  unless  prescribed 71 

Forfeiting  membership,  effect  of 71 

Forfeiture  of  charter,  power  instate 119 

Stockholder  has  no  power  to  sue  for  forfeiture  of  charter. 119 

Franchises  not  forfeited  by  agreement  to  suspend  and  close 

up  business 119 

Forms. 

Preliminary  agreement  for  incorporation 1-^8 

Application  for  membership 158 

Charter 159 

Special  act  of  incorporation - 163 

Of  stock  certificate -165 

Of  by-laws - 165 

Of  application  for  loan 179 

Of  appraiser's  report - 184 

Of  rules 185 

Of  mortgage  note - — 187 

Of  bond 188,  200,  203,  311 

Of  mortgage 139,206,313 

O  f  collateral  transfer 193 

Of  stock  note - 194 

Of  trust  deed - 15>4 

Of  insurance  clause 199 

Of  Dayton  Mutual  Home  Association  mortgage 217 

Of  co-operative  bank  mortgage 219 

Of  stock  register 224 

O f  warrant - -- 235 

Of  bank  check 225 

Of  building  agreement — 226 

Of  building  specifications 227 

Of  indemnifying  bond ^ 231 

Of  waiver  of  liens - •  283,234 

Of  bond  of  secretary , - 234 

Of  bond  of  treasurer 235 

Of  resolution  to  borrow 115 

Franchise,  non  user  of  does  dissolve 119 

Not  forfeited  by  agreement  to  suspend  and  close  up  business. ..119 

Fraud,  liability  of  director  for 39,  40 

Fraudulent  satisfaction  of  mortgage,  relief  for 98 

Funds,  misapplication  of,  liability  of  directors  for 39 


XL  REFERENCES    TO    PAGES. 

General  agent,  powers  to  bind  association 52,  53 

General  Meetings.  Supreme  power  in  management  vested  in 

stockholders  assembled  in  general  meeting 36 

Directors  cannot  defeat  this  power. 36 

When  they  should  occur 36 

Date  of,  should  be  fixed  by  by-laws 37 

When  shareholder  entitled  to  personal  notice _     37 

Unless  held  pursuant  to  notice,  of  no  validity 37 

Must  be  held  in  the  locality  of  the  shareholders •. 37 

Special  or  unusual  matters  require  notice -37 

Acts  of  majority  present,  binding.. 37 

Objects  of 38 

Gross  negligence,  liability  of  directors  for 39 

Guidance  for  directors 40,  41 

Heirs  as  members 25 

Horizontal  premiums 78 

Idiot  cannot  be  member 22 

Illegal  action  of  directors  may  be  restrained  by  stockholders 25 

Illinois  associations .' 140 

Implication,  name  acquired  by 11 

Implied  powers _ 52 

to  borrow  money 113 

of  association  to  take  mortgage 55 

Incapacity  of  agent,  contract  may  be  rescinded  for. 49 

Incidental  powers,  association  has ...50,  53 

Incorporation,  averment  as  to 53 

Form  of  special  act  for 163 

Form  of  agreement  for 158 

By  letters  patent ' 13 

By  special  legislative  act 12,  13 

One  receiving  membership  benefits  estopped  to  deny ..25 

Members  estopped  to  deny 25 

Right  to  deny  in  the  stats . 25 

Indemnifying  bond,  form  of 231 

Indiana  Associations ^ 144 

Infants  as  members „ 23 

Inspection  of  books  by  members... 63 

Insolvency  does  not  dissolve  association 119 

Insolvent  association  should  have  receiver. 123 

Officer  of,  cannot  discharge  his  indebtedness  by  his  stock 49 

Rights  of  withdrawing  membersof 67 

Insurance,  Covenant  to  pay,  enforceable 84 

Breach  of  contract  to  carry 84  n 


REFERENCES    TO    PAGES.  XLI 

Carrying  by  borro'wer -- — l''"^  ^ 

Clause,   form  of - - - 1^^ 

lOTTR   Associations 1^^ 

.Interest,  None  on  fines - - 101 

Ceases  on  appointment  of  receiver 130 

Cliarges,  how  fixed  by  officers 106 

Illegal  cannot  be  recovered 105 

Usurious  measure,  of  damages  on  recovering  back 105 

Usurious,  may  be  recovered  back 105 

Usurious,  Refunded  clears  of  taint 105 

May  be  charged  on  the    principal    without  regard    to  the 

weekly  or  monthly  reductions... — 104 

Payable  during  suspension  of  business 120 

Should  be  on  the  sum  advanced... - 104 

Payable  weekly  or  monthly  not  usurious ..104 

Not  collectible  on  premium  or  interest 80,  105 

l^nTCsting  member  liability  for  losses 89,90 

May  be  without  borrowing... 63 

Investor,  liability  of 00>  137 

Issue  of  stock,  see  Re-issue  of  stock 56,  57 

J nd j^nient  against  association  binds  shareholders 54 

Junior  Incumbrancer  may    compel  application  of  stock 

payments  on  loan .- - 80,  88,  124,  125 

Must  notify  association  of  his  claim 126 

"Kansas  associations 143 

Kentucky,  statutory  interest  allowed 106  n 

I^eases,  elfect  of 91,  93 

Legal  status  of  member 59 

of  stockholder  defined 66 

X«egislature  may  amend  charter 18 

lienders  to  associations  entitled  to  payment  over  members Ill 

Where  society  exceeds  statutory  limit,  remedy  of Ill 

I^etters  patent,  incorporation  by.._ 12 

I>iability  of  attorney 45 

Of  association  foragent's  acts - 53 

Of  directors 39 

Of  secretary - --44 

Of  treasurer - 45 

Of- withdrawing  member 66,  128 

On  stock,  measure  of - 90 

Of  borrower  for  debts  of  association  under  his  mortgage.. 88,  89,  128 

Of  investor 90,  127 

Of  association  must  be  discharged  before  division 121 


XLII  REFERENCES    TO    PAGES. 

Liiability. 

Of  borrower 90,  127 

Of  stockholder 90,  127 

fiien  on  stock,  fines  are 101 

Waiver  of,  form  of 233,  234 

lioaii. 

Not  in  conformity  with  by-laws  but  under  express  statutory 

power,  not  void 30 

Duty  of  directors  in  granting 42 

Per  centage  of  value  to  be  loaned 4& 

Association  has  power  to  make 55 

Duty  of  association  to  make -74 

Advancement  on  shares  is - — 77  n 

Ap pi  ic ation  for 80 

Note  or  bond,  provisions  of 81 

Mortgage,  provisions  of _. -- . 81 

To  outsider  not  grantable  unless  authorized 88 

Cannot  be  defeated  by  borrower  as  unauthorized 83 

To  married  women 83 

Shares  as  collateral  security  for 85,  see  form,  193 

Payments  on  stock  not  ipso  facto  payments  on .-75 

Creditor  cannot  compel  application  of  stock  on S& 

Applications  of  stock  payments  are  compellable  by  junior 

incumbrancer,  or  purchaser,  or  surety - -  ..86,88 

Withdrawing  borrower  may  pay  off  and  retain  stock 87 

Assigned  shares  cannot  be  credited  on 88 

Leases  for 91,92 

Amount  payable  on  foreclosure -.93,  94,  95,  96 

Amount  payable  on  voluntary  repayment - 96,  97 

Interest  should  be  charged  on  the  sum  advanced 104 

Premium  only  enforceable  against  members .'.-105 

Not  paid  at  one  time,  but  receiving  legal  interest,  not  usurious..  105 

Form  of  application  for - 179 

Method  of - 133,  134,  135,  136 

liOans,  character  of  security  for 3 

Stock 3 

Mortgage 4 

liOSSes,  liability  of  investor  and  borrower  for 89,90 

Liability  of  borrower  for . 127 

Ulaine  Associations - 141 

Majority  acts  of,  at  meeting,  binding - 37 

Iflaking  loans - —80 

Malfeasance  of  agent,  contract  may  be  rescinded  for 49^ 

Manner  of  withdrawal - 64. 


REFERENCES    TO    PAGES.  XLIII 


lIKarried.  woman  as  member. 
Loans  to . 


.22 

.83 


Loans  enforceable  against  husband  of 83 

Marish ailing  of  assets ^24 

When  doctrine  of,  applies 126 

Maryland,  associations. - 1^^ 

Massachnsetts  associations 139 

Matured  value  of  stock  not  recoverable  on  withdrawal 66 

Ifatnrity  of  series 1^1 

Retiring  of  stock  before 68 

Of  stock  premium  chargeable  to,  only 79 

Of  stock  in  serial - - 122 

•    Stockholders  may  wind  up  before - H^ 

Measure  of  Damages  on  recovery  of  usurious  interest 105 

Of  liability  on  stock 90 

Member.    See  Stockholders. 

M  ay  borrow - 3,  23 

May  withdraw 3,  8,  24 

May  transfer  stock - - 3 

M ay  pledge  shares 3 

Pays  entrance  fees 3,21 

Should  pay  additional  cost  when 6 

How  constituted 10 

Relation  to  corporation -- 21 

Relation  to  state — 21 

Entrance  fee  prerequisite  of  membership 21 

Non  compos  cannot  be  a  member -- 22 

Becomes  a  member  by  subscribing  for  stock 22,30 

Not  compelled  to  accept  illegal  conditions 22 

Married  women  and  infants  as  members .22 

Contracts  with  married  women 22 

Purposes  of  membership - 22 

Purposes  not  material - 23 

Is  debtor  to  the  association 2o  and  n,  59,  63 

Jlntitledto  be  credited  with  profit 23 

Association  bound  to  lend  to  members 24 

Withdrawal  of,  terminates  membership 24 

Issuingof  pass  book - - 24 

Payments,  how  credited  on  pass-books 24 

Pass  books  prima  facie  evidence  of  membership 24 

Procedure  when  pass-books  are  lost 24 

Certificates  of  stock  how  issut^d 24 

Rules  concerning  when  upheld 24 

Estopped  to  deny  incorporation 25 

Illustration  of  rules ^ 25  n 


XLIV  REFERENCES    TO    PAGES. 

Member. 

Rightto  deny  incorporation  in  the  state 25 

One  receiving  membership  benefits  estopped 25,  29  n 

Directors  should  lieep  within  corporate  powers 25 

Stoclvholders  may  restrain  illegal  action  of  directors 25  n,  39 

Association  when  estopped  to  deny  membership 25 

Death  of  stockholder ..26 

Death  dissolves  membership 26 

Heirs  or  devisees  as  members _ 26 

Becomes  such  by  owning  stock  without  signing  any  agreement 30 

Not  bound  by  amendment  of  by-laws  without  notice 28 

By-laws  requiring  members  to  sign  obligation  are  directory 29 

Bylaws  are  part  of  contract  between  member  and  association 30 

Violating  by-laws  cannot  complain  if  waived  by  association 30 

Cannot  complain  if  holding  shares  contrary  to  by-laws,  but 

not  contrary  to  statute 30 

Has  but  one  vote 38 

Not  relieved  from  duties  by  acts  ultra  vires 51 

Effect  of  tender  when  sued 54 

Default  of  other  members  will  not  relieve  him 59 

May  be  shareholder  and  creditor 60 

Pro  rata  interest  in  reserve  fund 60 

Borrowing  entitled  to  pro  rata  part  of  profits 60 

After  enjoying  benefits  of  by-laws  cannot  question  legality  of 62 

May  inspect  books  of  association . 62 

May  invest  without  borrowing 63 

Formerly  denied  in  England _ _. 63 

May  be  sued  for  dues 63 

Should  give  written  notice  of  withdrawal _. 64 

Member  withdrawing  is  creditor  of  association 65,  68 

Amount  member  may  recover  on  withdrawal 65 

Legal  status  of  withdrawing,  defined 66 

Withdrawing,  liabil ityof ..66 

Withdrawing  not  bound  by  new  rules. 66 

Withdrawing  may  sell  his  interest 67 

Withdrawing  from  insolvent  association,  rights  of ..67 

Withdrawing  must  show  funds  in  treasury  to  enforce  demand... 66 

Defaulting  cannot  transfer  stock 70 

Forfeiting  membership,  effect  of 71 

Defaulting,  disposition  of 71 

Borrowing,  status  of 71,  73,  73  n 

Borrowing,  selection  of 74 

Not  deprived  of  ordinary  benefits  by  mortgage  in  ordinary  form. 82 

Should  be  accommodated  before  outsiders  on  loans 83 

Cannot  be  compelled  by  creditor  to  apply  stock  payments  on 

loan 86 

Withdrawing  borrower's  manner  of  repayment 86 


REFERENCES    TO    PAGES.  XLV 

Member. 

Withdrawing  borrower,  credit  how  ascertained . 87 

Losses,  liability  for 89,  90 

Liability  on  stock 90,  127 

Fines  only  collectible  from  members 101 

Lenders  to  association  entitled  to  payment  over —  111 

Defaulting  entitled  to  share  in  profits 123 

When  may  compel  settlement 124 

Cannot  participate  in  assets  until  creditors  are  paid 126 

Memberi^hip  fee 3 

Form  of  application  for 158 

Method  of  loans inS,  134,  135,  136 

Of  charging  premiums 75,76,135 

Of  dissolution 119 

Meetings.    See  General  and  Special  Meetings. 

Of  directors 37 

Michigan  associations 140 

Minimnm  premium 78 

Minnesota  associations 142 

Minntes  of  meetings _ 41,  47 

Misapplication  of  funds,  liability  of  directors  for 39 

Misnomer 11 

Mississippi   associations 142 

Missouri  associations 142 

Mistake  of  law 98 

Mode  of  Amendment  as  prescribed  must  be  strictly  followed.. 33 

Of  charter 19  n 

Money  of  association  should  be  loaned _ 74 

Mortgage  Foreclosure,  See  Foreclosure  of  Mortgage. 

Loans -.-.4 

Association  has  implied  power  to  take 55 

Association  has  no  power  to  sell 116 

Assignment  effect  of 116 

Registration   of -.91 

Acknowledgment  of 90 

Of  borrower  does  not  secure  liability  for  debts  of  association, 

unless  so  provided 88,  89,  128 

Not  void  for  uncertainty... , 83 

May  be  deposited  for  collateral  security Ill,  112,  113 

In  ordinary  form  does  not  deprive  member  of  benefits ..82 

Provi.sions  of 81 

Satisfaction  of 92 

Release  of  by  association  when  there  is  a  second  mortgage 88 

Preparation  of 84 


XLVI  REFERENCES    TO    PAGES. 

Mortgage  Foreclosnre. 

Satisfaction  of  by  president 98 

Note,  form  of , 187 

Form  of 189,  206,  213,  219 

Mntnal  Home  and  Savings  Association 136,  137 

Form  of  mortgage  of 217 

Name 11, 12 

Nebr a !^ka  associ ations 144 

K^ecessity  of  fines. •. 99 

Jfeglect  to  elect  officers  does  not  dissolve  association 119 

Negligence  gross,  liability  of  director  for 39 

New  Hampshire  associations ...140 

New  Jersey  associations 139 

Bond 211 

Mortgage 213 

New  Yorlt  associations _ 138 

Non  compo!^  cannot  be  member 22 

Non  nser  of  franchise  does  not  dissolve 119 

North  Carolina  associations 141 

North  Dakota  associations I44 

Notary  Public,  when  disqualified 90,91 

Note,  provisions  of 81 

Form  of  mortgage  note 187 

Form  of  stock  note I94 

Notes,  association  cannot  trafllc  in 55 

Notice, 

Of  amendment  of  by-laws  should  be  given 28 

Character  of  notice.. .•. 28 

When  shareholder  entitled  to  personal  notice  of  general  meeting.  37 

General  meeting  must  be  held  pursuant  to  notice ..37 

Required  for  special  meeting 37 

For  special  meeting,  how  served 37 

Of  withdrawal  should  be  written __ 64 

Of  withdrawal,  how  served 65 

Notice  of  forfeiture  not  necessary  unless  required 71 

Of  junior  incumbrancer  to  association 126 

Recording  subsequent  incumbrance,  is  not  notice 126 

Actual,  efliectof 126 

To  stockholders,  when  not  necessary 13 

Nnl  tiel  corporation,  plea  of 53 

Office,  association  should  have .._.36 


REFERENCES    TO    PAGES.  XLVII 

Officers. 

Compensation ..... - - — * 

To  be  selected - - * 

Stockholders  elect H)  35 

Consist  ordinarily    of    president,    vice-president,    secretary, 

treasurer  and  attorney , 35,  36,  42 

Election  of,  by  ballot 36 

Election  to  be  provided  for  by  by  laws 36 

Secretary  and  treasurer  should  givebond 36 

May  include  abstracter  and  appraisers 42 

Manner  of  election  as  fixed  by  by-laws  to  be  strictly  observed.. -4» 

Cannot  be  removed  by  stockholders 48 

Cannot  be  removed  by  courts --48 

Removal  of,  should  be  provided  for  in  by-laws 49 

Cannot  use  position  for  personal  benefit 49 

Relation  of  ofllcers  to  association 49 

Liability  of,  in  distributing  funds 60,  62 

Fines  against  delinquent 99 

Rules  for,  in  fixing  interest  charges -.106 

Neglect  to  elect,  does  not  dissolve  association _ 179 

Oliio  associations 137 

Opinion,  directors  not  liable  for  mistake  in 39,  40 

Oregon  associations 144 

Organization 9 

Promoters  of  association 9 

Services  of  promoter,  proof  of — 9  n 

Preliminary  contract 10 

Expenses  of 10 

Stockholder,  how  constituted 10 

Subscription  for  stock 10 

Stock  subscription  for 10 

Association  may  enforce  stock  subscription 10 

Articles  of  incorporation 11,  12 

Preparation  of  articles  of  incorporation 11,  12,  14,  15 

Preparation  of  charter  of  incorporation . 12,  14, 15 

Name 11,  13 

Signing  of  articles  of  incorporation 12 

Charter,  preparation  of 11,  12, 13,  14,  15 

Registration  of  articles  of  incorporation 13 

Shareholders  adopt  by-laws 11 

Shareholders  elect  officers 11 

Certificates  of  stock 13 

Defects  in  organization  cannot  be  collaterally  attacked 16,  17 

Form  of  agreement  for  incorporation 158 

Outsider,  when  may  borrow 83 

Overdrawing  bank  account 114 


XL.VIH  REFERENCES    TO    PAGES. 

Paid  up  stock,  issue  of , 60,'61  n 

Partnership 76  n,  77n 

Pass  Book,  issuing  of 24,36 

When  must  be  produced  on  ■withdrawal ..6i) 

Prima  facie  evidence  of  membership 24 

Procedure  when  lost 24 

Payment  of  lenders  to  association  before  members 111 

Of  dues  cannot  be  required  except  as  stipulated 81 

Of  dues  at  secretary's  place  of  business,  when  valid 63 

Of  dues  ceases  when  association  is  in  hands  of  receiver 81 

Of  dues  should  be  to  authorized  officer 63 

Payments. 

Application  of 84 

Credited  on  pass  books 24 

On  re-assigned  stock 87 

On  stock  not  ipso  facto  payments  on  loan 85 

On  stock  application,  effect  of 88 

Penalty  for  failure  to  take  loan 74 

Pennsylvania  associations 138 

Bond ■ , - 202 

Mortgage 206 

Per  centage  of  value  to  be  loaned 46 

Permanent  association,  retiring  stock  in 121 

Change  of  to  serial ..130 

Plan  of 6 

Perpetual  succession 50,  51 

Plea  of  nul  tiel  corporation 53 

Pledging  shares 3 

Pledged  stock  cannot  be  withdrawn .- 69 

Preminm  charges 3 

Stockholders  need  not  pay  for  priority  of  payment  of  matured 

shares -.29 

Paid  as  a  preference 74 

Methods  of  charging 75,  76 

When  usurious. 76,  102,  103 

When  not  usurious 77,  78  notes 

Have  general  legislative  authority.... 77,  n,  104 

Auction  premiums  when  must  be  complied  with 77 

Fixed  unchangeable 78 

Horizontal  or  uniform 78 

Minimum  premium 78 

Chargeable  to  maturity  only 79 

One  premium  only  chargeable 79 

Interest  not  chargeable  on 80,  105 


REFERENCES    TO    PAGES.  XLIX 

Prcminm. 

Not  usurious  as  formerly - 

When  authorized  by  statute,  recoverable 103  n 

Effect  of  disregarding  statute ^^^ 

Enforceable  only  against  members l"^ 

Methods  of  charging 1^*'  ^^^ 

Unearned ^'^^'  ^*'^ 

Powers.  _ 

When  courts  may  interfere  -with  exceeded  powers i* 

Corporate  functions  not  enlarged  by  assuming  unauthorized 

powers ......... -•- *"" 

Association  has  power  to  amend  by-laws 31 

Supreme  power  of  management  vested  in  stockholders  assem- 
bled in  general  meeting **" 

Of  special  meetings ^'^ 

Of  directors  to  remit  fines  or  compromise  debts 42,  55 

Of  courts  to  remove  officers — -4S 

Of  stockholders  to  remove  officers 48 

Of  directors  to  rescind  contract  of  agent 49 

General  powers  of  association "^ 

Tohave  a  common  seal ^^ 

To  contract ^^ 

To  hold  real  estate ^50,  56 

To  sue  and  be  sued ^^' 

To  maki^  by-laws - ^^ 

Incidental  association  has  such  as  are  necessary ...50,  52 

or  agents  should  be  defined •  ^^ 

Of  special  agent • "" 

Of  general  agent ^2,  53 

Delegation  of,  by  secretary  or  appraisers 53  n 

To  loan  money ^^' 

To  take  mortgages '^^ 

When  may  issue  stock  to  another  corporation 56,  57 

To  borrow  money 107,  108,  109,  110,  111,  112,  113,  114,  115 

To  sell  mortgages ■^^"' 

Poirer  of  building  associations  to  borrow  money 

Act  of  Parliament  1874 HO' 

American  authorities HI 

English  authorities - ^^^ 

1 1  «> 
Implied  power. - '■'■'' 

Legislative  intention 108 

Necessary  to  meet  demands  for  loans 108^ 

Necessary  to  pay  off  a  series 107 

Necessary  to  cancel  matured  stock 107 

Remedy  of  lenders  where  statutory  limit  is  exceeded HI 

To  borrow  for  authorized   purpose 114 

Of  state  to  withdraw  charter  lor  exceeded  powers 16- 


L,  REFERENCES    TO    PAGES. 

Preference,  bidding  for 74 

Preferential  stocli,  issue  of 60 

Preliminary  contract 10 

Preparation  of  articles  of  incorporation 11,  12,  14,  15 

For  loan 80 

President. 

Should  issue  call  for  special  meetings 37 

Duties  of 43 

Should  appoint  auditing  committee 47 

Should  make  record  cancellations 98 

Profits,  Division  of 7 

Division  of  in  serial 122 

Members  entitled  to  be  credited  with 23 

Promoter,  services  of... 9ii 

Provisions  of  agreement  to  take  shares 11 

Of  mortgage 81 

Of  note  or  bond 81 

Proxies,  when  may  be  used 38  and  n 

Public  Policy.    By-lavrs  must  not  be  contrary  to 29 

Purchaser  of  property  may  compel  application  of  stock  pay- 
ments on  loan . 86,  88 

Purposes  of  membership 23 

Quorum,  how  estimated 87,  38 

Ratification  of  agent's  unauthorized  act,  effect  of 53 

Beal  Estate  holding  beyond  power,  effect  of 56 

Holding  beyond  power  does  not  dissolve  association 56 

Power  of  association  to  hold 50,  56 

Receiver,  Appointment  of,  for  insolvent  association 123 

Dues  and  interest  cease  on  appointment  of 120 

Payments  of  dues,  etc.,  cease  when  association  is  in  hands  of 81 

Recording  subsequent  incumbrance  not  notice  to  association 126 

Refusal  of  association  to  transfer  shares,  remedy  for 70 

Registration  of  incorporation 13 

of  mortgage^ 91 

Reissue  of  stock 131 

Relation  of  officers  to  association 49 

Remission  of  fines 42,  55 

Removal  of  directors 48 

Of  officers 48 

•«»  Of  officers  should  be  provided  for  in  by-laws 49 

Repayment  by  withdrawing  borrower 86 

Report  of  auditors,  impeachable  when... 47 


REFERENCES    TO    PAGES.  LI 

Reserve  Fnnd,  each  member  has  pro  rata  interest  in 60 

Resignation  of  director 48 

Resolution  to  borrow,  form  of 115 

Retiring  series 12 1 

Stock  before  maturity . . 68 

Retroactive  Amendments  of  by-laws  apply  fully  uuless 

vested  rights  are  impaired 32 

Reven nes  of  association _ 4 

Rhode  Island  associations 141 

Rules. 

Concerning  issue  of  stock  certificate 24 

Needed  by  the  association 33 

May  be  amended  as  by-laws 33 

Unwritten  will  govern  when  acted  on,  if  reasonable 33 

By-laws  should  be  kept  distinct  from 33 

For  general  guidance  of  directors 40,  41 

Withdrawing  member  not  bound  by  new  rules 67 

Form  of 185 

tSale  of  money  by  auction 74 

Satisfaction  of  mortgage 93 

of  mortgages  by  president 98 

Seal. 

Use  of,  by  statutory  corporations... 20 

When  seal  should  be  attached 20 

Any  device  or  form  will  answer 20,  52 

Common,  power  of  association  to  have 50 

Custody  of - - - 51 

Contracts  requiring 52 

Secretary. 

By-laws  defining  his  duties  part  of  sureties'  contract.. 30 

Should  give  bond _ 36 

Receiving  dues  at  his  oflice 36 

Duties  of 43 

Liability  of 44 

When  guilty  of  embezzlement 49 

Estoppel --49 

May  delegate  power 53  n 

Payment  of  dues  at  place  of  business,  when  valid 63 

Should  enter  notices  of  withdrawal 65 

Form  of  bond  of 234 

Security,  character  of - 3 

Securities,  association  should  not  take  unlawful 50 

Selection  of  borrower 74 


L.II  REFERENCES   TO   PAGES. 

Serial,  division  of  profits... 123 

Maturity  of  stock . 123 

Change  of,  to  permanent 130 

Series,  maturity  of 121 

Of  stoclc,  association  may  borrow  to  pay  off 113 

Service  of  notice  of  withdrawal -.05 

Services  of  promoter,  proof  of 9n 

Set  off,  borrower  entitled  to - 92 

Settlement,  when  member  may  compel 124 

When  required — 121 

Sbares.    See  Stock 

Pledging 3 

Shareliolders.    See  Stockholders. 

Sig^ning;  of  articles  of  incorporation .. 13 

Special  Agent,  how  far  may  bind  association 53 

Special  legislative  act,  incorporation  by 13 

Special  Meetings. 

Notice  required 37 

Call  for,  how  made ^ 37 

Notice  for,  how  served 37 

Power  of 37 

Acts  of  majority  present,  binding ..37 

Specifications  building,  form  of 227 

State  has  power  to  forfeit  charter _ 119 

May  annul  charter,  when 51 

Powers  of,  to  withdraw  charter  for  exceeded  powers 16 

Status  of  borrowing  member 71,  72,  73  n 

Statutes. 

By-laws  must  be  consistent  with 29 

Eight  of  withdrawal  usually  defined  by 64 

Effect  of  failure  to  strictly  comply  with 16 

Strict  compliance  with,  in  charter  unnecessary 16 

Statutory  References. 

Alabama, 163 

Arkansas, . 153 

California,... 153 

Colorado, 153 

Connecticut, 153 

Dakota, 153 

Delaware - 153 

Florida, 154 

Georgia, - 154 

Illinoia, -,. 154 


REFERENCES    TO    PAGES.  LIH 

Statntory  References.  .^^ 

Indiana, ^^^ 

lo^^' ;;i54 

Kansas, ,_. 

^  ,  154 

Kentucky, . 

Louisiana, -- — - ,_. 

-,  .  154 

Maine,, ^g^ 

Maryland, . 

Massachusetts, ' 

-.-154 
Michigan, - ^^^ 

Minnesota, -- 

Mississippi, 

Missouri, ' 

Montana, — -- " "  ikk 

Nebraska, " -[^k 

New  Hampshire, - 

New  Jersey, 

New  Mexico, 

;    New  York, 

North  Carolina, 

^,.  156 

Ohio, ^_„ 

„  ..156 

Oregon, ^^g 

Pennsylvania, 

Rhode   Island, 

South  Carolina, 

Tennessee, ^._ 

_,  15" 

^«""^■ 157 

Virginia ^^^ 

Wyoming, - 

Utah JJ; 

Washington, - 

West  Virginia, - 

Wisconsin, - 

^tock,  dues  are  partial  payments  on • 

Transfer  of 

Pledging  of .- 

Maturing  of 

Value  of "^ 

Loans ' 

Subscription  for.. V 

Association  may  enforce o/qr 

Certificates  of ^'^'        H 

Association  cannot  hold  stock  in  another  corporation 25 

Become  members  by  subscribing  for 22 

After  maturity  of,  stockholders  need  not  offer  premiums  for 

priority  of  payment — ~^- 

When  may  be  issued  to  another  corporation 56,  57 


LIV  REFERENCES    TO    PAGES. 

Stock. 

Preferential,  issue  of 60 

Paid  up,  issue  of 60,  61  n 

What  may  be  recovered  on  withdrawal 66 

Retiring  of  before  maturity 68 

Right  to  withdraw  limited  to  present  funds 68 

Pledged  cannot  be  withdrawn 69 

Transfer  of 69 

Must  be  transferred  on  books 70 

Certificates  should  be  surrendered  on  retirement 70 

Transfer  of,  effect  on  member's  liability 70 

Transfer  cannot  be  made  by  defaulting  member 70 

Assignment  of,  as  collateral  security 85 

Payments  on  stock  not  ipso  facto  payments  on  loan b5' 

Withdrawing  borrower  may  retain  and  pay  ofl  loan 8T 

Value  of,  on  withdrawal,  how  ascertained 8T 

Re-assigned  payments  on 87 

Assigned  cannot  be  credited  on  loan 88 

Fines  are  lien  on 101 

Association  may  borrow  to  cancel 111 

Cancelling,  effect  of 121 

When  to  be  retired 121 

Maturity  of 122^ 

Pledged  may  be  sold  as  against  purchaser 124 

Assessm ent  on 127 

Certificate  of,  forra  of 165 

Reissue  of 131 

Form  of  stock  register 224 

Stockholders. 

How  constituted 10,  IS 

Adopt  by-laws , 11 

Elect  officers _.ll 

When  notice  not  necessary _ IS 

May  restrain  illegal  action  of  directors 25,  51 

Death  of 26 

Should  have  notice  of  by-laws 27,  63 

Power  to  enact  by-laws  resides  in .28 

Need  not  pay  premium  for  priority  of  payment  after  maturity 

of  shares 29" 

Assembled  in  general  meeting  have  supreme  power 36 

Should  have  copy  of  report  of  association 36 

When  entitled  to  personal  notice  of  general  meeting 37 

General  meetings  must  be  held  in  locality  of 37 

Cannot  remove  directors 48 

Cannot  take  advantage  of  acts  ultra  vires  when 51 

Bound  by  judgment  against  association 64 

Liability  of,  not  terminated  by  withdrawal 64 


REFERENCES    TO    PAGES.  LV 

Stockholders. 

Legal  status  of,  defined 66 

Shown  by  book,  entitled  to  profit .-..70 

Liability  on  stock.. 90,  127 

Death  of,  does  not  dissolve  association 119 

Cannot  maintain  suit  to  forfeit  charter 119 

Account  of,  when  association  is  in  liquidation 120  n 

Stock  register  form  of 224 

Subscription  for  stock 10 

Sait  by  withdrawing  member,  necessary  allegations 66 

To  foreclose  mortgage,  constitution  and  by-laws  not  proper 

exhibits  under  Indiana  Code _. 82 

Maybe  on  bond  or  mortgage . 82 

For  dues  by  association 63 

Sureties. 

By-laws  defining  secretary's  duties  part  of  sureties' contract 30 

Sureties,  Responsibilities  of , how  ascertained ....47,  48 

Surety  may  compel  application  of  stock  payments  on  loans 88 

Discharge  of . 48 

Liability  of 48 

Effect  of  failure  to  read  bond 48 

Surrender  of  certificate  of  stock 70 

Suspension  of  business,  borrower  not  relieved  from  interest 

during 120 

Systems  of  loaning 133,  134,  135,  136 

Tables 146,  147,  148,  149 

Taxes,  covenant  to  pay  enforceable 84 

Tender  effect  of,  by  sued  member 54 

Tennessee  associations 139 

Texas  associations 144 

Transfer. 

Of  stock 3,69 

Of  stock,  effect  on  member's  liability 70 

Of  stock  on  books,  effect  of  failure  to 70 

Cannot  be  made  by  defaulting  member 70 

Fee  enforceable.. 70  n 

Shares,  refusal  of  association  to,  remedy 70 

Treasurer. 

Should  give  bond 36 

Duties  of 43 

Warrant  of,  not  negotiable 44  n 

Liability  of 45 

Is  only  a  bailee 45 

When  guilty  of  embezzlement 49 


LVI  REFERENCES    TO   PAGES. 

Treasurer. 

Estoppel 4» 

Form  of  bond 236 

Trustees,  directors  as 38,  39 

Trust  deed,  form  of 194 

Ultra  Tires,  Unlimited  borrowing  is,  in  English  societies 109 

Acts,  effect  of 50,51 

Liability  of  directors  for • 89 

When  stockholder  cannot  take  advantage  of 51 

When  association  estopped  to  deny  its  acts 51 

When  charter  may  be  annulled  for 51 

Do  nut  relieve  members  from  their  duties 51 

Do  not  of  themselves  end  corporate  existence 51 

When  subject  to  collateral  attack 5^ 

Unauthorized  transaction  void 50 

Unearned  premium 135,143 

Uniform  premium '3'* 

Unwritten  Kegulations. 

Will  govern  when  acted  upon,  if  reasonable 33 

Use,  name  acquired  by 11,12 

Usurious  interest,  measure  of  damages  on  recovering  back 105 

Interest  may  be  recovered  back..  . 105 

Refunded  clears  of  taint 105 

Charged  against  outsider 105 

Not  as  formerly 102 

When  premium  is  not ''"''>  78  notes 

Usury  definition  of - 102 

Not  avoided  by  complicated  transactions 103 

Combination  of  interest  and  expenses  at  a  higher  than  a  legal 

rate  is  tainted  with 102 

If  the  arrangement  makes  higher  than  the  legal  rate  it  is 103 

Avoided  on  the  partnership  theory 103  n 

When  cost  of  money,  not  usurious -- 103,104 

Interest  payable  monthly  or  weekly,  not  usurious 104 

Charging  interest  on  the  principal  without  regard  to  weekly 

or  monthly  reductions,  is  not 104 

A  personal  defense - 105 

When  loan  not  subject  to 105 

When  premiums  are  usurious "^6,  77  n 

Value  of  shares -5 

Of  shares  upon  withdrawal,  how  ascertained 87 

Of  stock  not  recoverable  on  withdrawal 66 

Per  centage  of,  to  be  loaned - 4& 

Tested  Rights,  amendments  of  by-laws  cannot  affect 81 


REFERENCES    TO    PAGES.  LVIl 

Vice  President,  duties  of.. - ---43 

Voluntary  repayment,  amount  of 96,  J7 

Repayment,  under  English  Rule, computation  for --94 

Repayment,  natural  and  logical  rule  for 96,  97 

Repayment,  rule  as  to  computation  for 94 

Vote,  member  has  but  one - -..38 

Waiver  of  liens,  form  of - - ~33,  234 

Washington,  D.  C.  associations 137 

Warrant  of  treasurer  not  negotiable «•- 44  n 

or  treasurer,  form  of. 225 

West  Virginia  associations 14- 

W^inding  up.     Bee  Dissolution 

Rights  of  withdrawing  members  on -68,  69 

Stockholders  may  wind  up  by  unanimous  agreement 119,  1 22 

Wisconsin  associations - - 141 

Witlnlrafving  borrower,  manner  of  repayment - 80 

Credits  entitled  to- -- 6,  87 

Not  compelled  to  make  application  of  stock -b7 

Member  of  insolvent  association,  rights  of 67 

Liability  of 66,  128 

May  sell  his  interest - 67 

Rights  of,  against  other  members 68 

Rights  of,  on  winding  up - 68,69 

Not  bound  by  new  rules 67 

Is  creditor  of  association — 65,  66 

Withdrawal. 

Of  members - 3,8,64 

Terminates  membership ..-24 

Should  be  attended  with  restrictions 64 

Does  not  terminate  all  liability 64 

Right  usually  defined  by  statute 64 

"Written  notice  of,  should  be  given _ 64 

Notice  of,  how  served 65 

Amount  payable  on 65,  69 

Amount  recoverable  on - -66 

Limited  to  present  funds 6b 

Directors  should  not  invest  funds  to  defeat 68 

Pledged  stock  not  subject  to 69 

When  pass  book  must  be  produced 69 

Wyoming  assrociations 143 


BUILDING   ASSOCIATIONS. 


CHAPTER  I. 
INTRODUCTION. 

Section  1.    Origin  of  Building         Section  3.    General  Schema. 
Associationg.  Section  4.    Diflerent  Types. 

Section  2.     Definition  of  Build- 
ing Associations. 

Section  1.     Origin  of  Building  Associations.    The 

origin  of  building  associations  is  involved  in  much  doubt,  and 
no  practical  purpose  will  be  served  in  devoting  much  time  to 
that  line  of  investigation.  The  Earl  of  Selkirk  is  given  the 
credit  of  founding  the  building  association  about  the  year 
1809'.  The  Greenwich  Union  Building  Society  was  its  name, 
with  the  object  of  raising  by  monthly  subscription  a  fund  or 
capital  to  be  laid  out  in  building  houses,  and  of  dividing  the 
same  amono-  members,  under  rules  created  in  a  deed  of  rules 
and  reirulations".  A  mention  of  "  building  clubs  "  occurs  ini 
Birmingham,  England,  in  1772.  Some  writers  have  given, 
their  origin  to  Germany,  connecting  the  frugal  and  accumulative 
dispositions  of   this  people,  probably,   with  the  institution; 

'Davis  Building  Society.'  objects  of  this  association  as  ex- 

*The  author  states  at  length  the      pressed  in  the  deed. 

1  (1) 


2  BUILDING     ASSOCIATIONS. 

but  there  is  no  authentic  support  of  the  claim.'  The  first 
building  association  in  America  is  generally  conceded  to  have 
been  The  Brooklyn  Building  and  Mutual  Loan  Fund  Asso- 
ciation.' However,  the  earlier  associations  found  existence  in 
the  city  of  Philadelphia,  about  1840;  their  spread  was  south 
and  west.  Frequently,  they  were  put  into  operation  as  unin- 
corporated societies',  flourishing  in  some  states  and  failing  in 
others.  Generally  they  have  become  the  subject  of  statutory 
creation  and  regulation,  and  being  independent  corporations, 
they  have  become  vast  depositories  of  savings  and  controllers 
of  enormous  property.  Their  influence  upon  economic  affairs 
is  far  reaching  and  the  multiplicity  of  their  interests  invites 
the  attention  of  the  lawyer,  legislator  and  jurist. 

Sec.  2.  Definition  of  Bnilding  Association.  The 
building  association  as  now  existing,  is  a  private  corporation, 
designed  for  the  accumulation  by  the  members  of  their  money 
by  periodical  payments  into  its  treasury,  to  be  invested  from 
time  to  time  in  loans  to  the  members  upon  real  estate  for  home 
purposes,  the  borrowing  members  paying  interest  and  a  pre- 
mium as  a  preference  in  securing  loans  over  other  members, 
and  continuing  their  tixed  periodical  installments  in  addition, 
all  of  which  payments,  together  with  the  non-borrower's  pay- 
ments, including  fines  for  failure  to  pay  such  tixed  install- 
ments, forfeitures  for  such  continued  failure  of  such  payments, 
fees  for  transferring  stock,  membership  fees  required  upon  the 
entrance  of  the  member  into  the  society,  and  such  other 
revenues,  go  into  the  common  fund  until  such  time  as  that  the 
installment  payments  and  profits  aggregate  the  face  value  of 
all  the  shares  in  the  association,  when  the  assets,  after  payment 
of  expenses  and  losses  are  prorated  among  all  members,  which 
in  leo-al  effect,  cancels  the  borrower's  debt,  and  gives  the  non- 
borrower  the  amount  of  his  stock. 

Sec.  3.  General  Sclieme.  The  periodical  installment 
is  called  dues,  and  is  a  partial  payment  on  the  certificate  of 

'Endlich    Building    Associations  'Merrill  v.  Mclntire,  13  Gray,  157 ; 

p.  3.  Baxter  v.  Mclntire,    13  Gray,  168; 

•Bibb  Co.  etc.  Association  v.  Rich-  Delano  v.  Wild,  6  Allen,  1 ;  Atwood 

ards,  21  Ga.  592.  v.  Dumas,  149  Mass.  167. 


GENERAL     SCHEME.  6 

stock  issued  to  the  member'.  When  the  share  reaches  face 
value,  it  is  matured.  Shares  are  commonly  for  $200.00,  some- 
times for  $100.00  or  $500.00.  Fines  are  imposed  for  failure 
to  pay  the  dues  at  the  fixed  time.  The  stock  is  sometimes 
forfeited  after  a  certain  time  for  continued  non-payment  of 
dues.  AVhen  shares  of  stock  are  assigned  by  a  member  to  any 
person,  they  have  to  be  transferred  on  the  books,  and  it  is 
usual  to  charge  a  small  fee  for  that  trouble. 

The  membership  fee  is  to  cover  the  expense  of  issuing  the 
stock.  When  a  member  desires  to  build  a  home,  he  takes 
from  the  association  the  amount  needed,  and  assigns  shares  of 
the  face  value  of  the  loan,  as  collateral  security,  and  agrees  to 
keep  up  his  payments  thereon.  This  is  pledging  shares.  He 
pays  a  premium  for  the  loan.  The  amount  of  the  premium 
is  reached  by  offering  money  to  the  highest  bidder,  and  the  pro- 
posed borrower  bids  a  few  cents  on  each  share,  payable  with 
the  dues,  or  a  lump  amount  to  be  deducted,  for  the  right  to 
have  the  money.  Upon  securing  that  right,  he  designates  his 
security,  and  a  committee  appointed  by  the  association,  values 
it,  and  if  it  is  sufficient  security  for  the  proposed  loan,  the 
borrower  submits  his  abstract  of  title  to  the  attorney  of  the 
association,  who  upon  pronouncing  it  perfect,  prepares  the 
necessary  papers  for  the  loan.  The  borrower  thereafter  pays 
an  additional  sum  into  the  association  by  way  of  premium  and 
interest.  The  association,  through  its  proper  officers,  keeps  an 
account  of  the  receipts  and  disbursements.  Members,  except 
those  pledging  their  shares,  may  withdraw  upon  certain  notice, 
and  receive  the  withdrawal  value  of  their  shares,  which  is 
sometimes  fixed  by  statute,  and  is  the  lawful  interest.  The 
rest  of  the  profits  attaching  to  those  shares,  goes  into  the  com- 
mon fund.  Each  member  may  borrow  if  he  can  give  security. 
The  association  usually  requires  a  note  or  bond  secured  by  mort- 
gage on  unincumbered  real  estate,  or  a  trust  deed,  or  any  sum 
not  exceeding  the  withdrawal  value  of  the  shares  may  be 
borrowed,  and  their  assignment  is  taken  as  a  collateral  se- 
curity.    A  loan  secured  by  pledge  of  shares,  is  a  stock  loan, 

*The  words  "  members,"  "  share-  used  synonymously  throughout,  this 
holders  "  and  "  stockholders  "    are       work. 


4  BUILDING     ASSOCIATIONS. 

and  when  secured  by  mortgage  on  real  estate,  it  is  a  mortgage 
loan. 

When  the  time  arrives  that  the  assets  are  sufficient  to  mature 
the  stock,  a  division  must  be  had,  after  payment  of  losses  and 
expenses.  The  controlling  rule  of  this  division  is  that  the 
assets  must  be  divided  equally  according  to  the  stock  holdings. 
The  non-borrowing  member  receives  the  value  of  his  stock, 
and  the  borrower's  debt  is  satisfied.  The  stock  is  thus  ma- 
tured and  cancelled.  But  a  borrower  is  usually  given  by 
statute  the  privilege  of  repaying  his  loan  at  any  time,  and 
thereupon  withdrawing.  So  that  he  is  not  compelled  to  stay 
in  to  maturity. 

The  revenues  of  the  association  usually  consist  of  member- 
ship fees,  dues,  premium,  interest,  fines,  and  transfer  fees. 
The  gross  profits  consist  of  membership  fees,  interest,  prem- 
ium, share  of  profits  left  by  withdrawing  shareholders,  fines 
and  transfer  fees.  Dues  are  not  profits,  as  they  are  partial 
payments  on  the  capital  stock.  The  association  will  have 
expenses.  They  are  sometimes  provided  for  by  statute;  if  not, 
they  should  be  paid  out  of  the  general  profits  from  time  to 
time,  before  any  division  is  made.  The  directors  should  only 
incur  such  expense  as  is  necessary  to  the  proper  conduct  of  the 
business.  The  same  care  used  in  private  business  should  be 
exercised  here,  for  if  the  directors  extravagantly  and  need- 
lessly make  expenses  they  grossly  violate  their  trust: 

This  is  the  general  design  of  a  building  association,  but 
there  are  different  modifications  of  this  general  scheme. 

This  corporation,  just  as  any  other,  must  have  officers,  who 
usually  consist  of  directors,  president,  vice-president,  secretary, 
treasurer,  attorney  and  appraisers.  The  business  of  the  asso- 
ciation may  call  for  assisting  officers  to  manage  a  great  volume 
of  business.  Compensation  of  the  officers  depends,  as  in  any 
other  business,  upon  their  work  and  the  amount  of  business. 
The  borrowers  usually  pay  the  attorney  for  his  services  in 
examination  of  the  title  and  preparation  of  papers  for  loans. 
The  scheme  is  so  simple  that  it  almost  carries  itself,  and 
attached  as  it  is  primarily  to  land  security,  which  after  all  is 
the  basis  of  all  security,  it  does  not  include  so  many  uncertain 


DIFFERENT     TYPES.  0 

problems  in  its  management  as  does  a  bank,  and  unless  grossly 
mismanaged,  will  show  the  finest  results  of  financial  co-opera- 
tion. 

Sec.  4.  DiflFerent  Tyi^es.  In  this  country  we  have  two 
distinct  and  prevailing  types;  one,  serial,  and  the  other  per- 
manent. The  general  plan  of  the  serial  association  is  to  issue 
a  certain  portion,  say  one-tenth  of  its  capital  stock  in  one 
series,  providing  that  it  shall  be  paid  in  weekly  or  monthly 
dues,  and  that  whenever  such  payments,  with  accumulated 
profits,  equal  the  face  value  of  the  shares,  each  share  shall  be 
retired  and  the  holder  thereof  shall  receive  the  amount  thereof 
in  cash;  provided  that  if  he  is  an  advanced  or  borrowing 
member,  i.  e.,  one  receiving  the  face  value  of  his  shares  before 
maturity,  his  debt  shall  be  considered  paid  and  cancelled. 
When  one  series  is  full  or  the  demand  is  satisfied,  then  a  sec- 
ond series  is  issued,  and  so  on  until  the  entire  capital  stock  is 
exhausted.  The  plan  of  issuing  in  series  is  only  for  conven- 
ience of  persons  desiring  membership,  who  for  any  reason  do 
not  care  to  pay  dues  back  to  the  formation  of  the  association. 
The  profits  are  the  total  profits,  divided  by  the  number  of 
shares  in  all  series  having  regard  to  the  age  of  the  shares.  The 
serial  association  does  not  credit  the  profits  on  the  shares  to 
any  farther  extent  than  to  keep  ^the  assets  in  solido  for  the 
benefit  of  all  the  shares.  The  value  of  the  shares  is  ascer- 
tained from  the  assets  by  calculating,  though  not  making,  a 
division.  The  fundamental  principle  in  ascertaining  this  value 
is  equalizing  all  shares.  The  total  net  profits,  excluding  dues, 
losses  and  expenses,  when  there  is  one  series,  should  be  divided 
by  the  number  of  shares.  The  result  is  the  value  of  the  shares. 
When  there  is  more  than  one  series,  the  profits  to  be  appor- 
tioned to  each  series  must  be  ascertained,  and  then  the  division 
of  the  apportioned  profits  by  the  number  of  shares  in  the 
series.  The  calculation  simply  proceeds  upon  the  theory  that 
a  sum  representing  the  net  profits  of  the  association  is  to  be 
divided  among  certain  series  of  different  ages,  and  the  quo- 
tients again  divided  by  the  number  of  shares  in  each  series  or 
class.  All  shares  in  any  one  series  have  the  same  value  and 
mature  at  the  same  time. 


0  BUILDING     ASSOCIATIONS. 

Very  frequently  an  applicant  for  membership  will  enter  a 
series  of  some  months  standino^,  and  pay  back  to  the  begin- 
ning. In  such  cases,  the  rules  should  provide  for  an  additional 
cost  of  shares,  equal  to  the  present  value,  as  it  is  readily  to  be 
seen  his  shares  would  be  entitled  to  profits  from  the  date  of 
the  series,  whereas  the  association  had  not  had  the  benefit  of 
his  money.  Fines  for  default  in  payment  of  dues,  a  small 
expense  charge,  interest  and  premium  charges  and  withdrawal 
privileges  are  provided  for.  These  associations  resemble  the 
English  terminating  society,  differing  in  that  the  former  makes 
only  a  part  instead  of  an  entire  issue  of  its  stock.  In  some  of 
these  associations,  the  premium  on  advancement  on  stock  is 
deducted  at  the  time  the  money  is  loaned;  in  others,  it  is 
charged  with  the  payment  of  dues.  The  permanent  associa- 
tion imitates  the  English  permanent  society  in  allowing 
entrance  at  any  time  without  back  payment  of  dues.  These 
societies  are  said  by  an  authority,  to  be  "  decidedly  the  best  of 
all  societies,  as  they  contain  more  of  the  elements  of  certainty 
and  equity,  if  the  rules  are  properly  drawn  and  observed.'" 
The  chief  distinction  between  the  two  kinds  is  that  a  person 
may  enter  the  permanent  association  at  any  time,  without  the 
back  payments.  So  far  as  the  names  are  concerned,  one  is  not 
more  permanent  than  the  other.  The  "  serial  "  by  issuing  new 
series  continues,  as  does  the  "  permanent "  by  issuing  new 
stock.  The  permanent  association  has  another  irnportant 
difference  from  the  serial,  and  that  is  by  the  system  of 
crediting  dividends  on  the  pass  books  of  members,  it 
actually  divides  up  the  profits  of  the  association  annually 
or  semi-annually  as  the  case  may  be.  The  withdrawing 
member  thus  can  ascertain  the  amount  he  is  entitled 
to;  the  borrowing  member,  the  amount  of  his  debt,  and 
the  investor,  the  value  of  his  shares.  As  the  permanent 
system  is  practiced  in  England,  it  is  said  it  holds  out  the 
greatest  inducements  to  the  borrower,  for  by  enabling  him  to 
extend  his  repayments  over  any  fixed  number  of  years  the 
present  cost  is  not  so  burdensome,  and  he  has  in  addition  the 

'  Davis  Building  Society  69. 


DIFFERENT     TYPES.  7 

right  of  withdrawal  of  his  shares  with  an  ascertained  value, 
and  may  thus  at  any  time  free  his  pro]>erty  of  incumbrance.' 
With  us  the  [)ermanent  is  not  of  greater  advantage  to  the 
borrower  than  tlie  serial,  unless  it  is  in  the  ascertainment  of 
the  value  of  his  stock  by  the  crediting  of  his  profits  on  his 
pass  book.  But  in  one  respect  it  is  of  decided  disadvantage. 
And  that  is  in  the  system  of  permanent  societies  in  crediting 
dividends  at  stated  periods,  with  privilege  of  withdrawing  the 
full  amount  of  payments  and  dividends. 

Of  all  the  members  the  borrower  is  most  likely  a  contin- 
uing member.  Under  the  system  of  dividing  up  the  profits 
at  stated  times,  any  member  desiring  to  withdraw  receives 
not  only  his  payments,  but  carries  away  a  pro  rata  part  of  the 
profits.  This  is  a  decided  innovation  upon  the  original  scheme 
which  may  result  in  injustice.  The  association  is  endeavoring 
to  mature  its  stock,^  yet  it  permits  withdrawing  stockholders 
to  take  away  a  part  of  its  ability  to  do  so.  Then  the  profits 
might  only  be  apparent.  An  association  running  over  a  series 
of  years  may  properly  expect  some  vicissitudes.  These  may 
eat  into  the  profits,  which  having  been  distributed,  the  burden 
must  fall  upon  the  members  who  have  been  the  sustaining 
force  of  the  association.  The  seeming  profits  which  had  been 
handed  out,  were  then  actually  losses.  In  Ohio,  this  defect  is 
undertaken  to  be  remedied  by  requiring  associations  to  carry 
5  per  cent,  of  the  net  earnings  to  a  contingent  fund  to  bear 
these  possible  losses.  This  is  a  step  in  the  right  direction, 
but  in  our  judgment  does  not  go  far  enough  in  justice  to  stay- 
ing members.  The  Ohio  law  provides  that  after  the  payment 
of  expenses  and  setting  aside  a  sum  for  contingent  fund,  the 
the  entire  remainder  of  such  earnings  shall  be  transferred  as 
a  dividend  to  the  credit  of  all  members.  Under  this  statute, 
the  bureau  of  building  associations  has  decided  that  after  the 
payment  of  expenses  and  the  setting  aside  of  the  contingent 
fund,  the  entire  amount  left,  even  to  the  fraction  of  a  per 
cent,  must  be  credited  on  the  members'  stock.     In  dividing 

*  Davis  70;  compare  Davis  Si-Td 
for  description  of  English  societies. 


8  BUILDING    ASSOCIATIONS. 

the  profits,  it  very  often  happens  that  a  small  sum  is  left 
over  after  fixing  the  dividend,  and  as  it  would  only  amount  to 
a  fraction  of  a  per  cent.,  the  work  in  calculating  each  mem- 
ber's share  would  be  very  laborious.  It  is  customary,  gen- 
erally, to  carry  this  amount  over  as  undivided  profits.  But 
the  Ohio  bureau  holds  such  action  contrary  to  the  statute.  It 
Beems  to  us  that  the  greater  benefits  should  be  given  to  the 
continuing  member.  While  the  withdrawing  member  should 
not  be  a  loser,  he  should  not  be  a  gainer.  The  association  in 
its  relation  to  him  should  endeavor  to  keep  him  whole  as  long 
as  it  does  not  infringe  the  rights  of  the  other  members.  But 
if  he  is  unable  to  comply  with  his  contract  and  carry  out  his 
promises  to  the  end,  because  a  liberal  statute  has  given  him 
the  right  to  terminate  it,  the  equities  are  pushed  too  far  in  his 
favor,  by  bestowing  upon  him,  besides  his  full  payments,  a 
pro  rata  part  of  the  profits.  It  is  foreign  to  a  proper  con- 
ception of  the  scheme,  and  while  the  Ohio  statute  provides 
some  protection,  it  does  not  compensate  the  continuing  mem- 
ber, and  the  bureau,  it  would  seem,  should  have  resolved  the 
doubt  in  favor  of  the  continuing  member,  rather  than  against 
him.  This  would  not  only  be  justice,  but  save  minute  divi- 
sions. The  withdrawing  member  will  be  justly  dealt  with  by 
payment  to  him  of  the  amount  of  his  installments  and  adding 
thereto  legal  interest.  The  borrower  then  whose  property  is 
charged  with  the  profit  bearing  mortgage,  will  have  compen- 
sation and  protection  for  his  continuing  support  of  the  asso- 
ciation, as  will  the  staying  non-borrowing  member,  who  has 
shared  with  him  the  burdens  and  responsibilities  of  the  associ- 
ation's career.  The  association  as  any  other  institution,  must 
conserve  its  strength  and  should  offer  inducements  to  mem- 
bers to  continue  instead  of  offering  compensation  for  their  with- 
drawal. If  the  withdrawing  member  receives  legal  interest, 
he  is  compensated,  and  if  there  is  a  remaining  profit,  it  should 
go  to  the  staying  member. 


CHAPTER  II. 


PRELIMINARY  ORGANIZATION. 


Section  1.    Preliminary  Agree- 
ments. 


Section  5.    Preparation  of  Cor- 
porate Articles. 


Section  3.  Agreements  Legally  Section  6.  Conformity  with  Cre- 
Considered.  ative  Law. 

Sections.    Articles  of  Incorpo-  Section?.  Procedure  After  Reg- 

ration,  istration. 

Section  4.    Corporate  Name. 

Section  1.  Preliminary  Ag^reements.  When  a 
number  of  persons  have  decided  to  organize  a  building  asso- 
ciation, a  first  step  must  be  taken,  and  that  is  a  preliminary 
organization. 

The  promoters  of  the  association  should  be  very  careful  of 
the  expenses   incurred    in   organizing/    providing   for   their 


'  The  implied  liability  of  a  cor- 
poration for  the  services  of  a  pro- 
moter may  be  rebutted  by  proof 
that  they  were  gratuitously  given, 
and  when  the  services  are  those  of 
an  attorney  in  organizing  a  building 
association,  there  being  no  express 
contract  as  to  services,  it  is  proper 
to  show  in  rebuttal  of  the  implied 
contract,  that  the  attorney  had  ren- 
dered like  services  gratuitously  in 


getting  up  other  building  associa- 
tions when  the  same  persons  were 
among  the  promoters,  and  the  proofs 
should  not  be  limited  to  what  was 
said  and  done  at  the  time  of  service. 
Subsequent  admissions  also  may  be 
shown,  but  it  is  proper  to  reject  a 
question  as  to  the  understanding  of 
the  parties.  Third  Ward,  etc.,  asso- 
ciation V.  Lotze  11,  Bull.  285. 


(9) 


10  BUILDING    ASSOCIATIONS. 

payment,  as  they  are  liable  individually,  for  the  amount  of 
expenses.  To  attach  liability  to  each  proposed  incorporator, 
they  should  also  carry  the  preliminary  steps  to  a  legal  con- 
tractual obligation  between  the  organizers,  for  each  to  bear  his 
part  of  the  expenses  incurred  in  the  preliminary  organization. 
There  should  also  be  an  agreement  that  the  preliminary 
arrangement  will  become  binding  for  incorporation.  That 
arrano-ement  takes  the  form  of  an  agreement  to  subscribe  for 
shares  in  the  association  to  be  incorporated.  No  particular 
form  is  required,  unless  prescribed  by  statute,  and  as  it  is  a 
matter  of  simple  contract,  it  rests  more  upon  general  principles 
than  statutory  requirement.  These  two  simple  contracts,  for 
all  to  bear  the  expense  and  to  take  shares  in  the  new  associa- 
tion, are  the  only  contracts  needed  until  incorporation  is  ready. 
If  the  association  is  incorporated  and  does  business,  all  proper 
expenses  may  be  charged  against  it.  The  agreement  to  bear 
expenses  is  intended  to  have  effect  when  there  is  a  failure  tO' 
incorporate. 

Sec.  2.  Agreements  Legally  Considered.  From 
a  legal  standpoint,  the  agreements  may  be  said  to  be  supported 
by  two  considerations;  mutual  promises  and  the  stronger  oner 
of  benefit  received  by  the  promissor  and  detriment  to  the 
promisee'.  Until  a  charter  is  obtained,  or  incorporation 
otherwise  perfected,  an  agreement  to  take  shares  is  a  mere 
offer,  revocable  or  not,  as  the  nature  of  the  agreement  may  de- 
termine. When  it  rests  on  a  valuable  consideration,  such  a& 
a  promise  for  a  promise,  then  as  a  rule  it  becomes  an  irrevoc- 
able option,  provided,  incorporation  according  to  the  terms  of 
the  offer  is  perfected  within  a  reasonable  time.  This  would 
constitute  the  offerer  in  substance  a  stockholder.  So  if  an 
offer  which  has  no  valuable  consideration  to  rest  on,  be  per- 
mitted to  stand  until  it  is  accepted  by  incorporation  according 
to  its  terras,  this  it  seems  would  be  an  irrevocable  subscription 
of  stock'.  The  corporation  may  enforce  the  agreement, 
although  it  is  not  a  party  to  it,  on  the  ground  that  it  was  made 

»See  Taylor  Priv.  Corp.  sec.  92.  Knox  v.  Childersburg,  etc.,Coinpany» 

«MoraweU  P.  C.    seca.    47,   128;      86  Ala.  180. 


AGREEMENTS    LEGALLY    CONSIDERED.  11 

for  its  benefit.'  The  mere  entering  into  a  valid  agreement  to 
take  shares,  does  not  constitute  the  persons  as  partners;  there 
must  be  some  agreement  showing  an  intention  to  divide  and 
share  profits  and  losses  before  there  is  a  partnership.'  The 
agreement  to  take  shares  should  be  one  to  take  a  certain  num- 
ber of  shares  of  designated  face  value  in  the  association  to  be 
thereafter  formed,  to  be  paid  for  in  weekly  or  monthly  install- 
ments, as  the  by-laws  may  provide,  with  the  further  provision 
that  if  the  incorporation  never  took  place,  the  expenses  of  the 
attempt  should  be  equally  borne  by  promoters.' 

Sec.  3.  Articles  of  Incprporatioii.  The  promoters 
of  the  association  having  entered  into  a  binding  arrangement 
to  take  shares  in  the  association,  and  bear  the  expense  of  the 
organization,  the  next  step  is  to  examine  the  requirements 
of  the  statute  on  incorporation.  A  certain  number  of  incor- 
porators and  a  certain  amount  of  stock  subscribed  may  be  re- 
quired. The  statute  should  be  consulted  as  to  any  precedent 
requirements  and  if  there  are  any,  they  must  be  adhered  to. 
These  provisions,  if  any,  being  observed,  the  preparation  of  the 
articles  of  association  follows.  This  should  be  entrusted  to  a 
competent  attorney. 

Sec.  4.  Corporate  Name.  Before  the  articles  are 
drawn,  however,  a  corporate  name  must  be  selected.  It  is 
necessary  for  purposes  of  identification,  at  least  to  the  existence 
of  a  corporation,  and  is  usually  given  by  the  charter,  but  where 
not  expressly  given,  may  be  acquired  by  implication  and  use.* 
The  misnomer  of  a  corporation  in  contracts  or  pleadings  has 
an  effect  similar  to  the  misnomer  of  an  individual.  If  from 
the  body  of  a  written  contract,  in  which  a  corporation  is  mis- 
named  the  corporation  intended  can  be  ascertained,  the  mis- 
nomer is  immaterial.* 

''Haskett  v.  Flint,  5  Blkf .  69 ;  Far-  *No  notice  is  necessary  in  refer- 
low  v  Kemp,  7  Blkf.  544;  Eastern,  ence to  calls  on  subscriptions:  Mor* 
etc.,  Company  v.  Vaughan,  14  N.Y.  rison  v.  Dorsey,  48  Md.  461. 
546;  Athol,  etc.  Company  v,  Carey,  *Smith  v.  Plank  Road  Company, 
116  Mass.  471;  Buffalo,  etc.,  Com-  30  Ala.  650;  Minot  v.  Curtis,  7 
pany  v.  Gifford,  87  N.  Y.  294.  Mass.  441. 

'Shibley  v.  Angle,  37  N.  Y.  636.  'Hoboken  etc.  Association  v.  Mar- 
tin, 13  N.  J.  Eq.  427. 


12  BUILDING    ASSOCIATIONS. 

A  building  association  cannot  by  user,  acquire  an  exclusive 
right  to  use  in  its  title  of  incorporation,  a  general  term, 
descriptive  merely  of  the  locality  with  which  its  business  is 
connected.*  The  name  should  have  some  significance  as  a 
matter  of  policy  and  should  not  resemble  existing  corpor- 
ate names  to  prevent  confusion. 

Sec.  5.  Preparation  of  Corporate  Articles.  The 
name  having  been  selected,  the  attorney  prepares  the  arti- 
cles of  association.  The  incorporating  statute  usually 
defines  what  the  articles  shall  state,  so  it  is  a  matter  of 
sticking  closely  to  the  statute.  Wherever  the  statute  is 
general  in  its  definitions  as  that  "  the  articles  shall  state 
the  objects  of  such  association,"  it  becomes  a  matter  of 
care  to  define  the  objects  broad  enough  to  meet  the 
requirements  of  the  association,  and  yet  limited  enough 
to  be  clearly  within  the  spirit  of  the  statute.  When  the 
articles  are  drawn  the  organizers  sign  in  manner  prescribed 
by  statute  before  some  oificer  capable  of  taking  acknowl- 
edgments. The  latter  is  for  the  purpose  of  procuring  their 
registration. 

The  beginning  of  the  corporate  existence  is  signing, 
acknowledging  and  filing  in  the  places  prescribed  by 
law,  the  articles  of  association.*  The  injunction  should  be 
strong,  that  the  articles  be  prepared  with  great  care  by 
an  experienced  draughtsman.  Unskilled  work  here,  will 
bring  on  endless  trouble  and  embarassment.  The  English 
courts,  in  several  cases,  have  observed  that  the  articles 
were  so  drawn  as  to  perplex  the  understandings  of  the 
ablest  men.3  American  courts  have  patiently  endeavored  to 
untano-le  some  serious  complications  rooted  in  unintelligible 
charters. 

Sec.  6.  Conformity  with  Creative  Laws.  If  the 
incorporation  is  by  letters  patent  from  the  Chief  Executive, 
the  articles  must  conform  to  the  statute  vesting  the  authority 
in  the  executive  to  issue   letters ;  in  the  case  of  special  legis- 

'Coloaial,  etc.,  Company  v.  Home,  'Carmody  v.  Powers,  60  Mich.  26t 

etc.,  Company,  Lim.,  33  L.J.  Ch.  741.  'Davis  Building  Society  17. 


PROCEDURE    AFTER    REGISTRATION.  13 

lative  act,»  the  charter  is  the  constitution  and  the  by-laws 
must  not  subvert  the  intention  of  the  legislature.  If  the  in- 
corporation is  by  general  statute,  the  provisions  therein  must 
be  given  substantial  adherence.  Too  often  does  the  charter 
invade  the  province  of  the  by-laws,  and  prescribe  rules  belong- 
ing legitimately  to  the  by-laws.  If  they  prove  unwise,  amend- 
ment or  repeal  is  difficult. 

The  charter  should  be  general  in  its  character,  adhering  to 
the  letter  and  spirit  of  the  creative  law,  and  leave  to  the  by- 
laws the  proper  limitations  as  they  may  be  needed. 

Sec.  7.  Procedure  After  Registration.  Wlien  the 
charter  is  signed,  as  required  by  statute,  and  the  signers  duly 
acknowledge  the  execution  of  the  instrument,  it  is  then  to  be 
filed  in  the  places  provided  by  law  for  registration.  Thereupon 
the  association  becomes  a  body  corporate  with  all  the  duties 
and  liabilities  of  a  corporation.  The  individuals  who  were 
active  in  its  promotion  have  changed  character,  and  are  now 
stockholders.  They  become  so  by  operation  of  law,  and  are 
not  entitled  to  any  notice  by  the  association  that  they  are 
stockholders,  subject  to  its  rules  and  to  the  payment  of  dues. 
The  first  act  of  the  new  corporation  after  the  adoption  of  by- 
laws and  the  election  of  oflicers,  is  to  issue  certificates  of  stock 
to  the  members.  They  are  shareholders  from  the  date  of  in- 
corporation, and  they  should  adopt  by-laws  and  elect  officers.* 
The  certificates  are  not  issued  until  after  the  officers  are  chosen. 
Their  issue  does  not  change  their  legal  status,  as  the  certificate 
only  evidences  the  holder's  interest,  as  a  promissory  note  is 
not  the  debt  itself,  but  evidence  of  it. 

Before  discussing  the  member  as  he  is  thus  created,  the  im- 
portance of  understanding  the  charter  and  its  legal  signifi- 
cance should  not  be  overlooked. 

'  An  act  of  the  legislature  incor-  petition  failing  to  specify  the  ob- 

porating  an  association  by  its  con-  jocts,  it  was  competent  for  the  court 

stitution  and  bylaws,  without  em-  to  do    so:     Red  wine  v.  Gate  City, 

bodying  the    same    in  the    act,  ia  etc.,  Association,  54  Ga.  474. 

valid    and     constitutional:       Bibb  *  The    adoption  of    by-laws  and 

Co.,  etc..  Association  v.  Richards,  election  of  officers  are  discussed  at 

21  Ga.  592. ;  and  where  incorpor-  chapters  V.  and  VL 
ation  was  by  decree  of  court,  the 


CHAPTER  III, 
CHARTER. 


Sectiow  1.    Importance  of  char-  Section  4.    EfEect  of  failure  to 

ter.  observe  statute. 

Section  2.    Must  generally  ad-  Section  5.    Construction, 

here  to  statute.  Section  6.     Amendment. 

Section  3.  What  constitutes  char- 
ter and  its  legal  effect. 


Section  7.    Corporate  seal. 


Section.  1.  Importance  of  Charter.  After  the  preli- 
minarj  organization,  a  charter  is  necessary,  and  as  was  stated  in 
the  preceding  chapter,  it  should  be  drafted  carefully  and  by  an 
experienced  person.  Its  preparation  should  be  referred  to  the 
attorney  of  the  association. 

This  fundamental  instrument  largely  gives  and  measures  the 
powers  of  the  association.  The  promoti  ng  persons  by  its  execu- 
tion, have  changed  character  and  have  been  merged  into  the  body 
corporate.  As  individuals  their  identity  is  gone,  but  as  parts 
of  the  corporation,  it  is  preserved,  so  far  as  rights  and  liabili- 
ties are  concerned.  The  law  has  invested  them  with  new 
duties  and  new  rights,  and  ignorance  of  them  will  not  serve  as 
an  excuse  to  stay  the  consequences  of  ignoring  them.  It  is 
important  to  know  something  of  the  charter  and  the  legal 
«tatus  of  the  association  and  the  member,  when  a  charter  is 
issued  and  the  corporation  first  has  a  legal  existence. 

(14) 


WHAT    CONSTITUTES    CHARTER.  15 

Sec.  2.     Must  Generally  Adhere  to  Statute.    The 

state  statutes  generally  deiiue  the  provisions  of  the  charter. 
In  drawing  it,  substantial  adherence  to  the  statute  must  be 
observed.  As  has  been  previously  stated,  it  is  unwise  to  say 
too  much  in  the  articles  of  association.  They  should  not  par- 
ticularize too  much,  for  subsequently  it  may  be  found  neces- 
sary to  change  some  material  provisions,  and  serious  difficulty 
is  then  encountered.  As  a  suggestion,  the  provisions  of  the 
statute  should  be  given  a  general  observance,  and  while  adher- 
ino-  to  the  letter  of  the  statute,  it  should  be  construed  by  its 
patent  intent.  The  articles  must  keep  within  the  scope  of  the 
statute,  but  where  it  makes  no  specification,  for  instance  as  to 
the  face  value  of  the  shares,  it  is  best  to  leave  that  to  the  by- 
laws as  they  may  be  adopted  by  the  stockholders.  Experience 
may  show  the  ailvisability  of  changing  the  denomination  of 
shares  after  incorporation,  which  may  be  readily  done  under 
such  a  charter.  Other  matters,  such  as  the  internal  govern- 
ment of  the  association,  for  instance,  as  to  the  number  of 
directors,  may  be  treated  in  the  same  way ;  but  the  corporate 
objects  should  be  clearly  and  amply  specitied  so  that  the  asso- 
ciation may  be  able  to  perform  its  natural  functions  without 
question. 

Sec.  3.  What  Constitutes  Charter  and  its  Legral 
Etfect.  The  articles  of  incorporation  of  an  association  formed 
under  the  general  laws  of  the  state,  are  its  charter  and  subject 
to  the  constitution  and  general  laws  of  the  state,  its  funda- 
mental and  organic  law.'  They  fix  the  rights  of  the  stock- 
holders, and  are  in  the  nature  of  a  fundamental  contract  in 
form  between  the  corporators,  and  in  practical  effect  between 
the  association  and  its  stockholders,  which  neither  party  is  at 
liberty  to  violate.'  By  the  filing  of  the  articles  of  association 
and  the  passing  to  the  incorporators  of  a  legislative  grant  of 
incorporation,  there  arise  contractual  relations  which  are  said 

•  The  constitution  of  the   state  is  association  with    righta  conflicting 

the  higher  law  of  course  than  the  with    the     constitution:      State   v. 

legislative    enactments,   so    that    a  McGrath,  95  Mo.  193. 

charter  is  amenable  first  to  that  law.  *  Bergman  v.  St.  Paul,  etc.,  Asso- 

The  legislature    can  not  invest  an  elation,  29  Minn.  275. 


16  BUILDING    ASSOCIATIONS. 

to  have  a  triple  character,  being  one  between  the  state  and  the 
corporation,  between  the  corporation  and  the  Btockholders, 
and  between  the  stockholders  and  the  state.*  In  determining 
the  rights  of  these  contracting  parties,  reference  must  be  had 
to  the  creative  law.*  It  is  the  primary  source  of  these  con- 
tractual rights,  but  the  articles  of  incorporation  and  constitu- 
tion and  by-laws  may  be  examined  for  the  purpose  of  deter- 
mining some  of  these  rights.' 

Sec.  4.  Effect  of  Failure  to  Observe  Statute. 
The  charter  should  conform  to  the  statute;  as  to  powers,  it 
must  conform,  for  if  it  wantonly  exceeds  the  legislative 
authority,  the  state  may  exercise  its  inherent  right  to  with- 
draw the  charter  and  from  that  source  lies  danger.  The  safe 
course  is  to  follow  the  statute,  but  failure  in  strict  compliance 
will  not  always  defeat  incorporation,*  as  where  the  certificate 
of  incorporation  was  acknowledged  before  a  wrong  ofiicer,  it 
was  held  that  upon  correction,  the  corporation  was  de  jure 
from  the  date  of  its  organization,  not  only  as  against  persons 
dealino-  directly  with  the  association,  but  as  against  all  others.* 
And  the  defects  in  organization  can  not  be  attacked  in  a  col- 
lateral suit.'  The  courts  generally  declare  that  if  there  has 
been  a  bona  fide  attempt  to  organize  a  corporation,  persons  as 
members  and  borrowers  will  not  be  allowed  to  say  the  asso- 
ciation can  not  enforce  its  contracts,  because  it  is  defectively 
organized.'  The  refusal  of  the  courts  to  assist  persons  in 
defeating  their  agreements  with  associations,  extends  only  to 
imperfections  in  organization.  If  the  association  is  so  defec- 
tively organized  that  it  can  not  legally  carry  on  its  corporation 

»  Cook  Stock,  etc.,  sec.  492 ;  it  has  *  Lord  v.  Essex  Building  Associa 

long  been  settled  that  as  between  tion,  87  Md.  320. 

the  state  and  the    corporation  the  '  Spinning  v.  Home,  etc.,  Associa- 

charter  is  a  contract:     Dartmouth  tion,  26  Ohio  St.  483. 

College  Case,  4  Wheat.  518.  'Williamson    v.     Kokomo,    etc., 

*  McCahan    v.     Columbian    etc..  Association,  89  Ind.  389. 
Association,  40  Md.  226;  Michigan,  '  Hagerman  v.   Ohio,   etc.,  Asso 
etc.,    Association  v.  McDevitt,    77  elation,  25  Ohio  St.,  186 ;  Payette  v 
jlich.  1.  Free  Home,  etc.,  Association,  27  111 

*  McCahan  v.  Columbian  etc.,  As-  App.  307. 
Bociation,  40  Md.  226. 


EFFECT    OF  FAILURE  TO  OBSERVE  STATUTE.       17 

business,  it  should  re- incorporate  and  transfer  the  property  to 
the  new  corporation  or  wind  up  its  atfairs  and  paj  its  debts 
and  distribute  its  assets. 

The  corporation  may  be  so  defective  as  to  render  the  fran- 
chise whollj  invalid  in  a  proceeding  against  it  by  the  state, 
still  its  corporate  existence  when  acting  under  color  of  a 
franchise,  cannot  be  questioned  in  a  suit  where  it  would  arise 
collaterally.'  But  if  the  association  steps  beyond  its  corporate 
authority  and  clearly  violates  its  charter,  the  remedy  may  not 
be  alone  with  the  state.  The  court  fully  cognizant  of  its  ex- 
ceeded authority,  and  having  no  equities  of  third  persons  to 
preserve,  will  pronounce  its  contracts  void  and  leave  the  asso- 
ciation stripped  of  all  rights  assumed  by  the  transaction.* 
And  the  association  cannot  enlarge  its  functions  by  incorpo- 
rating powers  in  its  charter  that  are  not  authorized  or  con- 
templated by  statute.' 

Sec.  5.  Construction.  Care  should  be  taken  that  in 
framing  the  charter,  the  domain  of  the  by-laws  is  not  invaded. 
The  by-laws  yield  readily  to  amendment,  while  the  charter  is 
an  inflexible  compact,  changeable  only  by  the  power  granting 
it.  The  inflexible  character  of  the  charter  and  its  importance 
as  the  instrument  of  corporate  existance,  are  too  often  over- 
looked. It  is  frequently  framed  without  care,  regardless  of 
the  duties  and  rights  that  spring  from  it.  Considered  as  a 
contract,  its  construction  is  one  of  intent  of  the  parties,  the 
state  and  the  incorporators.  This  intent  is  discoverable  by  the 
legislative  utterance  on  the  part  of  the  state  and  from  the 
instrument  itself  on  the  part  of  the  incorporators.  So  lono-  as 
the  instrument  is  the  subject  of  construction,  the  work  is  a 
possible  one.  but  when  its  amendment  is  considered,  the  rio-hts 
of  both  contracting  parties  intervene  and  must  be  carefully 
adjusted  without  legal  injury. 

'Lincoln,     etc.,     Association    v.  etc.,  Association,  27  111.  App.  807. 
Graham,  7  Neb.   173;   Williamson  'Anderson  v,  Cleburne,  etc.,  As- 

V  Kokomo,    etc..     Association,    89  sociation,  16  S.  W.  Rep  298;  Simp- 

Ind.  389;  Building    Association  v.  son    v.     Building    Association,    88 

Moreanthal,    2  Pears.  343;  Winget  Ohio  St.  349. 

V.  Quincy,  etc..  Association,  128  111.  'Albright   v.     Building    Associ- 

<{7;  Tayette,  etc.,   v  Free    Home,  ation,  102  Pa.  St.  411. 

2 


,18  BUILDING    ASSOCIATIONS. 

Sec.  6.  Anieiiclmeiit.  The  power  to  amend,  pre-sup- 
poses  legislative  authority.  All  powers  rightfully  exercised 
by  corporate  bodies,  being  conferred  by  the  government,  either 
in  express  terms  or  by  clear  implication,  authority  for  every 
corporate  act  must  be  found  in  the  grant  or  requirement  of 
some  legislative  act.*  In  determining  whether  or  not  the 
charter,  the  creative  instrument,  may  be  amended,  it  is  neces- 
sary to  examine  the  legislative  act  under  which  it  is  given. 
Ko  vote  or  act  of  a  corporation  can  enlarge  its  chartered 
authority,  either  as  to  subjects  on  which  it  is  intended  to 
operate,  or  the  persons  or  property  of  the  corporators.  If 
created  with  a  fund  limited  by  the  act,  it  cannot  enlarge  or 
diminish  the  fund,  and  if  the  capital  stock  is  divided  into  a 
fixed  number  of  shares,  this  number  cannot  be  changed  with- 
out authority  from  the  legislature.'  The  legislature  has  the 
inherent  right  to  amend  where  no  vested  rights  are  impaired, 
with  the  consent  of  the  majority  of  the  stockholders',  but  no 
material  amendment  can  be  made,  except  by  unanimous  consent 
of  the  stockholders.*  The  legislature  may  reserve  power  tO' 
amend.  When  the  legislature  reserves  power  to  amend,  it 
may  do  so  in  a  way  reasonable  and  consistent  with  the  scope 
and  object  of  incorporation.* 

Of  every  corporation  formed  under  the  general  law,  the  law 
itself  becomes  the  charter,  defines  and  enumerates  the  pow- 
ers which  are  to  be  exercised,  the  nature  and  extent  of  cor- 
porate franchises  and  privileges.  The  declaration  of  incor- 
poration, the  constitution  and  by-laws  adopted  for  corporate 
government,  do  not  form  the  charter  or  define  or  enum- 
erate the  corporate  powers.  These  are  the  acts  of  the  incor- 
porators. The  charter  is  the  grant  from  the  sovereign  power 
of  the  state;  and  by  that  source  only  can  be  amended  or 
enlarged.* 

>  State  V.  Washington,  etc.,  Com-  Tharp,  1  Houst.  Del.,  149. 
ipany,  11  Ohio,  96;  but  see  Wange-  *Cook  Stock,  sec.  495. 

irien  V.  Aspell,  47  Ohio  St.  250.  »  Shields  v.  Ohio,  95  U.  S.  319. 

'  Salem  Mill-Dam  Corp.  v.  Ropes  'Grangers,  etc..  Company  v.  Kam- 

6  Pick.  23.  per,  73  Ala.  325. 

'Delaware   R.   B.    Company    v. 


AMENDMENT.  19 

"The  power  to  alter  and  modify  does  not  give  power  to 
make  any  substantial  addition  to  the  work."'  Within  these 
limits  the  len^islature  may  exercise  reserved  power  without  the 
consent  of  the  corporation."  If  the  amendments  exceed  these 
and  alter  contract  relations,  the  consent  of  the  stockholders 
must  be  had.'  If  the  amendment  be  merely  auxiliary,  that  is 
merely  an  assistance  to  carry  out  the  original  plan,  the  consent 
of  the  majority  of  the  stockholders  is  sufficient.*  But  if  the 
amendment  is  fundamental,  materially  changing  the  original 
plans  unanimous  consent  is  necessary.* 

If  the  incorporation  is  under  a  general  statute,  the  legisla- 
tive amendment  may  be  by  a  general  enactment,  and  if  the  in- 
corporation is  by  special  enactment  the  amendment  of  the 
charter  would  be  by  special  statute. 

When  it  is  proposed  to  amend  the  charter,  legislative  author- 
ity is  prerequisite.  The  legislature  can  amend  with  consent  of 
stockholders;  if  the  amendments  are  material,  unanimous  con- 
sent is  necessary;  if  incidental,  a  majority  consent  is  sufficient. 
If  the    statute   authorize    amendments  they  may   be  made, 

'Zabriskie    v.     Hackensack    etc.  leges,  which  do  not  change  essen- 

Company,  18  N.  J.  Eq.  178.  tially  the  nature  and  character  of 

*Cross  V.  Peach  Bottom,  etc.,  Com-  the  corporation,  or  the  purpose  for 

pany,  90  Pa.  St.  392.  which  it  was  created,  and  have  for 

'Illinois,  etc..  Company  v.Zimmer,  their  object  the  promotion  of  the 

20  111.  654.  enterprise  originally  contemplated, 

^Illinois,  etc..  Company  v.Zimmer,  fall  within  the   second  class.    All 

fiupra.  amendments  which  work  a  radical' 

*Mill8  V.  Central,  etc..  Company,  change  in  the  nature  and  character 
81  N.  J.  Eq.  1 ;  Cook  Stock,  sec.  500.  of  a  corporation,  or  the  purpose  for 
In  a  Connecticut  case,  the  court  said :  which  it  was  created,  are  within  the 
"Some  amendments  or  laws  affect-  third  class."  New  Haven,  etc..  Com- 
ing corporations  are  binding  with  or  pany  V.  Chapman,  38  Conn.  56.  It 
without  their  assent.  Others  bind  should  be  observed  that  there  is  a 
the  corporation  and  every  member  distinction  between  the  obligation 
thereof,  if  assented  to  by  a  majority  of  a  contract  and  the  remedy  given 
of  the  stockholders.  And  others  are  by  the  legislature  to  enforce  that 
not  binding  upon  non-consenting  obligation.  Without  impairing  the 
members,  although  assented  to  by  obligation  of  the  contract,  the  rem- 
the  majority.  All  general  laws,  and  edy  may  be  modified  or  changed  as 
mere  matters  of  police  regulation,  the  legislature  may  direct;  Sturges 
are  embraced  in  the  first  class.  Ad-  v.  Crowninshield,  4  Wheat  122. 
ditional   powers,   duties  and  privi- 


20 


BUILDING    ASSOCIATIONS. 


although  the  charter  is  silent  on  the  subject,'  but  under  such 
power,  a  majority  of  stockholders  cannot  make  a  fundamental 
chancre  and  bind  a  non-consentins:  stockholder.  Where  the 
amendments  are  merely  auxiliary,  a  majority  may  consent  and 
make  them  binding.  The  application  of  the  law  to  the  facts  of 
each  particular  case,  renders  the  subject  full  of  difficulties, 
and  the  right  to  amend  the  charter  should  be  carefully  inves- 
tigated before  any  attempt  is  made,  or  the  whole  corporate 
existence  may  be  involved  in  confusion. 

Sec.  7.  Corporate  Seal.  Building  Associations  can 
better  carry  on  their  business  with  a  regular  corporate  seal. 
The  ancient  rule  applied  to  corporations  existing  by  the  com- 
mon law  was  that  they  could  only  act  by  their  common  seal; 
the  rule  has  no  application  to  corporations  created  by  statute.* 
The  rule  is  however,  that  the  corporate  seal  need  not  be  at- 
tached to  a  corporate  contract,  unless  a  similar  contract,  when 
made  by  an  individual,  would  require  a  seal.'  Thus,  a  build- 
ing association  in  a  deed,  would  need  to  use  a  seal  as  required 
of  an  individual;  however,  any  device  or  form  will  operate  as 
a  seal  if  there  was  an  intent  to  bind  the  association  and  a  seal 
of  some  kind  was  used.*  This  rule  would  not  apply  in  states 
where  the  statutes  require  a  corporate  seal  to  be  used. 


'Wangerien  v.  Aspell,  47  Ohio  St. 
250.  If  the  charter  itself  provides 
a  mode  of  amendment,  it  must  be 
adhered  to:  McKeown  v.  Building 
Association,  5  Bull.  62. 


'Curry  v.  Bank,  8  Port  Aia.  861. 
*Cook  Stock,  etc.,  sec.  721. 
*Cook  Stock,  etc,  sec  723   and 
cases  cited. 


CHAPTER  IV. 


MEMBERS. 


Section  1. 

tiOD. 

Section  2. 
fications. 

Section  3. 
bership. 

Section  4. 
rial. 

Section  5. 


Effect  of  incorpora- 
Membership  Quali- 
Purposes  of  Mem- 
Purpose  not  mate- 
Right  to  borrow. 


Section  0.    Right  to  withdraw. 

Section  7.    Certificate  of   stock 
and  pass-books. 

Section  8.    Members    estopped 
to  deny  incorporation. 

Section  9.     Illegal     to     Invest 
funds  in  other  corporations. 

Section  10.     Death    of     Stock- 
holder. 


Section  1.  Effect  of  Incorporation.  By  the  issuing  of 
the  charter,  the  association  is  erected  as  a  corporation.  Con- 
sidered either  as  an  artificial  person  or  as  a  body  of  stock- 
holders, in  law  it  is  a  legal  entity  in  that  it  remains  a  whole, 
although  its  component  parts  may  change.  The  stockholders, 
as  the  persons  to  whom  the  corporation  belongs,  have,  by  be- 
coming stockholders,  assumed  contractual  relations  with  each 
other,  with  the  corporation  and  with  the  state.  The  building 
association,  being  a  modified  type  of  private  corporations,  to 
perform  its  peculiar  functions  embraces  a  variety  of  unusual 
rights  and  liabilities  for  the  stockholder.  Upon  his  subscription 
for  stock  he  pays  an  entrance  fee.  There  are  no  other  pre- 
requisities  of  membership  unless  they  are  the  legal  disabilities 
of  infancy  and  coverture,  which  are  Bometimes  removed  by 

(21) 


22  BUILDING    ASSOCIATIONS. 

statute.  Of  course,  a  non-compos  could  not  be  a  member. 
The  law  does  not  recognize  him  except  by  its  guardianship. 

Sec.  2.  Membership  Qualifications.  A  person  be- 
comes a  member  of  a  building  association  by  subscribing  for 
and  holding  stock/  He  acquires  status  as  a  stockholder  in  this 
way.  The  incorporating  statute  usually  provides  for  the 
manner  of  the  holding,  and  the  by-laws,  in  accordance  there- 
with, give  the  rules  governing  his  membership ;  but  he  is  not 
compelled  to  accept  any  conditions  of  membership  imposed  by 
the  by-laws,  and  not  authorized  by  statute.'  Any  person,  ca- 
pable of  entering  into  a  binding  contract,  may  become  a 
member  of  a  building  association;  although,  in  some  states, 
this  ability  is  extended  by  statute  to  married  wumen  and  in- 
fants, who,  at  common  law,  are  unable  to  enter  into 
contracts,  they  are  not  thereby  given  the  power  to  bor- 
row money  and  execute  a  valid  mortgage  therefor,  unless 
the  statute  expressly  enables  them  to  do  so.  The  association^ 
when  authorized  by  statute,  may  receive  them  into  member- 
ship; but  further  contracts,  entered  into  without  express  legis- 
lative authority,  will  be  taken  at  its  peril.  In  some  states, 
general  married  women  enabling  acts  have  been  passed,  where- 
by they  may  contract  for  certain  purposes;  under  these  stat- 
utes, the  association  may  safely  enter  into  contracts  beyond 
the  membersliip  agreements,  but,  as  the  statute  is  in  deroga- 
tion of  the  common  law,  it  must  be  strictly  construed.^  Any 
contract  thus  made  must  strictly  adhere  to  the  statutory  im- 
provements. In  making  contracts  with  married  women,  as  in 
loaning  money  to  theiu,  it  should  be  carefnlly  understood  in 
writing  that  the  money  is  going  for  the  purposes  for  which 
they  are  enabled  to  contract. 

Sec.  3.  Purposes  of  Membership.  A  person  enters 
a  building  association  for  one  of  two  purposes;  to  deposit  his 

'  Robertson  v.  Homestead  Asso-  ling     act,    but    continued    payinj^ 

ciation,  69  Am.  Dec.  151,  note.  monthly  installments  after  its  pas- 

*  Building  Association  v.  Robin-  sage,  she  cannot  set  up  her  disa- 
6on,  46  L.  I.  Pa.  5.  bility  at  the  time  she  entered  into 

*  But  where  a  married  woman  the  contract;  Dilzer  v.  Building 
purchased  stock  prior  to  an  enab-  Association,  103  Pa.  St.  86. 


RIGHT     TO    BORROW.  23 

money  or  to  borrow.  His  deposits,  generally  of  required 
periodical  svinounts,  are  applied  by  the  association  as  payments 
on  his  stock.  The  dues  are  nothing  but  partial  payments  on 
stock.  Thus  the  depositing  member  by  his  small  payments  is 
enabled  to  accumulate  and  put  his  accumulations  at  work. 
The  association  adds  those  accumulations  to  his  stock  pay- 
ments— dues — and  when  the  aggregate  is  equal  to  the  face  of 
the  stock  it  is  retired,  the  membership  ceases.  In  thus  re- 
receiving  stock  subscriptions  and  distributing  the  earnings 
thereof  in  part  payment  of  the  subscription  debt,  to  itself,  the 
association  occupies  a  position  between  a  private  corporation 
and  a  partnership.  The  statute  thus  conceives  it  and  for  con- 
venience has  endowed  it  with  a  corporate  character.  Out  of  this 
process  correlative  rights  grow.  The  association  is  entitled  to 
require  the  payment  of  dues  as  agreed  by  the  member,  and  if 
they  are  not  paid,  to  enforce  a  penalty.*  The  member,  on  the 
other  hand,  is  entitled  to  have  the  net  profits  pro-rated  and 
so  credited  on  his  stock.'  No  other  corporation  is  given  suchl 
powers  and  no  other  stockholder  has  such  rights.  In  ordinary 
corporations,  the  stock  subscriptions  are  presently  due,  and  the 
profits  are  declared  as  dividends,  and  are  withdrawable  interest 
on  the  investment. 

Sec.  4.  Purpose  not  Material.  The  purpose  of  the 
member's  stockholding  is  not  material  to  the  association.  He 
may  invest  for  profit  or  to  meet  debts  or  to  acquire  a  fund  for 
business  or  to  get  a  loan.^  His  status  us  a  stockholder  is  not 
affected  by  his  purpose  of  entering.  For  him  it  i^  merely  a 
savings  institution  in  which  he  places  his  money  and  holds 
stock. 

Sec.  6.  Rig-ht  to  Borrow.  One  of  his  important  rights 
is  to  borrow  money  from  the  association.  Whenever  the  dues 
and  other  revenues  create  a  surplus  in  the  treasury,  he  has  the 

'  From    the    moment  a  member  *  People  v.  Lowe,  117  N.  Y.  175. 

joins,  until  he  withdraws  or  his  stock  'Mutual  Savings  etc.  ABSociation 

matures,  he  is  a  debtor  to  the  asso-      v.  Wilcox,  24  Ck>nn.  147. 
elation  for  the  unpaid  balance  of  his 
stock;  Michigan,  etc.,   Association 
V.  McDevitt,  77  Mich.  L 


24  BUII.DING    ASSOCIATIONS. 

right  to  take  it  npon  such  reasonable  terms  as  the  association 
may  fix.  The  legislature  invests  the  association  with  the 
power  to  loan  money,  in  fact  it  imposes  upon  it  the  duty  of 
lending  it  to  the  members  who  have  a  right  to  compel  its 
loaning.  He  takes  on  additional  rights  and  burdens  by  bor- 
rowing money,  but  he  has  the  right  to  borrow  as  he  has  also 
the  liability  of  the  debt. and  its  cost  in  the  shape  of  prem- 
ium and  interest. 

Sec.  6.  Right  to  Withdraw.  The  member  may  ter- 
minate his  membership,  stop  future  payments  and  liabilities 
upon  notice  to  the  association.  He  is  invested  with  the  right 
to  surrender  his  stock  upon  equitable  terms  with  or  without 
the  consent  of  the  association.  In  this  he  differs  from  an 
ordinary  stockholder,  and  is  somewhat  like  a  partner,  who  by 
retiring,  dissolves  the  partnership.  The  withdrawing  member 
does  not  affect  the  corporation  or  the  other  stockholders,  but 
'be  effectually  terminates  his  membership,  as  does  the  retiring 
partner  his  partnership.  The  member  has  the  legal  attributes 
of  both  partner  and  shareholder  so  adapted  as  the  purposes  of 
his  existence  require,  yet  he  holds  legal  status  as  a  stockholder 
and  must  be  so  considered. 

Sec.  7.  Certificates  of  Stock  and  Pass-Books. 
When  a  person  has  entered  an  association,  a  pass  book  is  issued 
to  him  upon  which  his  periodical  payments  are  to  be  credited. 
The  pass  book  is  accompanied  by  a  certificate  of  stock.  The 
pass  books  are  prima  facie  evidence  of  membership.*  But  the 
holding  of  a  pass  book  and  certificate  of  stock  is  not  necessary 
to  constitute  membership.*  If  lost,  the  association  may 
replace  it  upon  proper  indemnity  that  it  will  suffer  no  loss 
thereby.'  Keasonable  rules  concerning  the  issuing  of  certifi- 
cates will  be  upheld,  so  where  the  by-laws  provide  that  a 
defaulting  member  might  take  a  new  certificate  for  a  less 
number  of  shares,  and  the  payments  on  the  old  were  to 
be  applied  on  the  new,  the  court  held  that   all  arrears  on 


•Qermantown,  etc.,  Association,  v.  'Chester,  etc.,   Co.  v.  Dewey,   16 

Sendmeyer,  50  Pa.  St.   67 ;  Dobin-      Mass.  94. 
son  V.  Ha-wks,  12  Jur.  1037.  «0ook  Stock,  etc.,  sec.  870. 


MEMBERS  ESTOPPED  TO  DENY  INCORPORATION.    25 

the  old  must  be  paid  before  the  member  was  entitled  to  the 
privilege.' 

Seo.  8.  Members  Estopped  to  Deny  Incorpora- 
tion. It  is  the  rule  well  established,  that  a  party  dealing  with 
the  association  and  receiving  the  benefits  of  a  contract,  cannot 
claim  that  the  association  is  defectively  organized  or  that  the 
creative  law  is  unconstitutional.  This  right  is  in  the  state; 
and  a  person  receiving  membership  benefits  from  the  associa- 
tion may  become  estopped  to  deny  his  membership.^  The 
result  of  this  rule  is  that  contracts  of  the  association  beyond 
its  power  may  be  sustained  as  against  a  benefitted  party  or  a 
stockholder,  yet  the  directors  should  not  knowingly  venture 
beyond  the  corporate  scope,*  as  their  acts  might  invoke 
remedies  with  a  different  result.* 

The  association  by  receiving  dues  is  likewise  estopped  to 
deny  the  existence  of  stock.* 


'Fulton  V.  American,  etc,  Associa- 
tion, 48  N.  W.  R.781 ;  Eaton  v.  Am- 
erican, etc..  Association,  49  N.  W. 
R.  865. 

'Winget  V.  Quincy,  etc.,  Associa- 
tion, 128  111.  67. 

*Bate3  V.  People's,  etc.,  Associa- 
tion, 42  Ohio  St.  655.  So  one  whose 
mortgage  recites  that  he  is  a  mem- 
ber, cannot  deny  membership  in  an 
action  for  foreclosure.  Howard, 
etc.,  Association  v.  Mclntyre,  3 
Allen  571 ;  a  borrower  can- 
cannot  deny  the  right  of  the  asso- 
ciation to  loan  on  more  than  the 
number  of  shares  limited  by  law, 
and  his  creditors  are  likewise  es- 
topped: Building  Association  v.  Ar- 
beitur  Bund,  6  Bull.  823.  And  where 
it  is  required  tliat  the  whole  capital 
stock  be  taken  in  an  association 
where  the  amount  of  capital  stock 
is  fixed  and  the  number  of  shares 
ascertained,  yet  if  a  shareholder 
knowing  the  full  stock  has  not  been 


taken,  attends  meetings,  votes  for 
the  expenditure  of  money,  and  the 
purchase  of  property,  or  does  other 
acts  from  which  it  may  fairly  be 
inferred  that  he  intends  to  waive 
such  right,  he  will  be  estopped  to 
set  it  up  as  a  defense  upon  his  stock 
subscription:  Morrison  t.  Dorsey, 
48  Md.  461. 

*The  "corporate  scope"  is  the 
purpose  of  the  association  as  ascer- 
tainable from  the  articles  of  asso- 
ciation, together  with  such  purposes 
as  are  necessarily  implied  in  pro- 
perly conducting  the  business. 

'A  minority  of  the  stockholders 
may  maintain  a  bill  in  equity  to 
prevent  illegal  action  on  the  part  of 
the  majority  after  request  to  the 
proper  ollicers  to  interfere,  and 
their  failure  or  refusal  so  to  do. 
Memphis,  etc.,  Co.  v.  Woods,  88 
Ala   630. 

*North  America,  etc..  Association 
V.  Button,  35  Pa.  St.  468. 


26  BUILDING    ASSOCIATIONS. 

Section  9.  Illegal  to  Invest  Funds  in  Other  Cor* 
porations.  It  may  be  taken  as  a  general  proposition  that  ai 
building  association  has  no  power  unless  authorized  by  statute 
to  hold  stock  in  another  association  or  corporation.*  The 
reason  of  this  is  patent,  as  it  was  intended  by  the  legislature 
that  the  corporate  resources  should  be  entirely  applied  to 
furthering  the  objects  of  the  corporation. 

Section  10.  Death  of  Stockholder,  In  case  of  death 
of  the  stockholder,  the  by-laws  should  make  some  provision 
for  the  retirement  of  the  stock  or  the  manner  by  which  it  may 
be  carried  on. 

When  it  is  provided  that  in  the  event  of  the  death  of  a 
stockholder,  his  heirs  or  legal  representatives  were  entitled  to 
continue  the  relation  of  stockholder,  the  death  of  the  member 
operates  a  dissolution  of  his  membership,  terminating  his  con- 
nection with  the  association;  and  upon  his  heirs  or  devisees 
and  not  upon  his  personal  representatives  is  conferred  the 
privilege  of  succeeding  to  or  continuing  the  membership;  and 
if  such  privilege  is  exercised  by  the  heirs  or  devisees,  they 
become  members  not  in  a  representative  capacity,  but  in  their 
own  right,  and  they  are  subject  individually  to  the  duties  and 
liabilities  of  membership.' 

'Mutual,     etc.,     Association    v.  ' Montgomeiy,   etc.,    Association 

Meriden,  etc.,  Co.,  24  Conn.  169.  T.  Bobinson,  69  Ala.  418. 


CHAPTER  V. 


BY-LAWS. 


SROTioir  1.    Framing  and  adop- 
tion. 


Power 
Notice    of    amend- 


Sbction  2.      Definition 
to  enact  and  amend. 

Section  3. 
ment 

Section  4.    Character  of  by-laws. 

Section  5.    Construction  of  by- 
laws- 


Sectioit  6.    Amendment  of  liy- 

laws. 


Resolutions     and 
Mode    of     amend- 


Section  7. 
amendment. 

Section  8- 
ments. 

Section  9.      Provisions    of    by- 
laws. 


Section  1.  Framing-  and  Adoption.  The  iiicorporator& 
should  select  a  committee  to  frame  the  by-laws  and  fix  a  time 
wheu  its  report  is  to  be  heard.  Notice  should  be  given  of  the 
time  and  place  of  the  meeting.  The  discussion  of  the  by-laws 
should  be  full,  and  their  character  well  understood,  as  the  by- 
laws being  the  law  arranged  for  the  internal  government  of  the 
association,  and  affecting  the  stockholder's  rights  throughout 
he  should  know  what  they  mean.  The  suggestion  applies  with 
equal  force  to  the  association,  as  in  the  case  of  litigation,  the 
result  is  most  often  dependent  upon  the  construction  of  the  by- 
laws. The  by-laws,  upon  their  adoption  by  the  incorporators, 
should  be  printed  and  circulated  among  the  stockholders. 
Each  stockholder  should  have  actual  notice  of  their  contents.  It 
may  be  said  as  much  particularity  should  be  exercised  in 
framing  by-laws  as  the  charter, 

(87) 


28  BUILDING    ASSOCIATIONS. 

Sbo.  2.    Definition — Power  to  Enact  and  Amend. 

A  bj-law  is  a  rule  by  which  the  affairs  of  the  association  are 
fto  be  conducted.  The  power  of  corporations  to  enact  by-laws, 
exists  independent  of  statute,  but  the  incorporating  statute 
usually  gives  the  power.  The  power  to  make  by-laws  resides 
in  the  stockholders;  the  directors  have  no  inherent  right  to 
make  them.'  Usually,  in  the  promotion  and  incorporation  of 
an  association,  part  of  the  promoters  and  incorporators  act  as 
the  first  board  of  directors.  The  by-laws  should  not  be 
adopted  by  them  as  directors,  but  as  stockholders,  unless  the 
charter  expressly  confers  on  the  directors  such  power.  Yery 
often  it  is  inconvenient  for  the  stockholders  to  be  called 
together  to  amend  the  by-laws,  and  when  it  is  done,  it  is  gen- 
erally a  perfunctory  matter,  so  it  is  convenient  to  have  the 
power  of  enacting  and  amending  by-laws  delegated  to  the 
directors  by  the  stockholders.  This  may  be  done  in  the  by- 
laws.' But  the  exercise  of  this  right  by  the  directors  does  not 
dispense  with  the  necessity  of  giving  full  notice  of  the  amend- 
ments to  each  stockholder. 

Sec.  3.  Notice  of  Amendment.  Notice  should  be 
given,  as  provided  in  the  by-laws,  or,  in  the  absence  of  any 
provision  it  may  be  given  by  mail,  or  by  posting  up  the 
amended  by-law  in  the  ofBce  of  the  association,  and  calling 
€ach  niember's  attention  to  it.  The  safest  course  is  by  mail,  as 
the  member  may  not  be  in  the  office.  A  person  has  the  right 
to  treat  the  by-laws,  given  him  on  his  becoming  a  member,  as 
all  the  by-laws  of  the  association,  and  he  is  not  bound  to  take 
notice  of  modifications  of  such  by-laws  on  the  record 
of  the  company  simply,  without  further  notice  to  him.^  And 
the  burden  of  showing  that  notice  was  given  is  upon  the  asso- 
ciation, so  it  should  adopt  the  method  that_is  a  sure  convey- 
ance of  notice  to  each  stockholder.  But  a  member  cannot 
resist  payment  of  stated  dues,  fines,  etc.,  on  the  ground  that 
by-laws  of  the  association  have  not  been  adopted  by  a  vote  of 

'  Morton,  etc.  Co.  v.  Wysong,  51.  •  McKenney  v.  Diamond    State, 

Ind.  4.  etc.,  Association,  18  All.  Rep.  905. 

'  Heintzelman  v.  Druids',  etc.,  As- 
sociation, 36  N.  W.  Rep.  100. 


CHARACTER    OF    BY-LAWS.  2^ 

the  members  or  directors,  where  it  appears  that  they  have 
been  recorded,  acted  upon  and  enforced  as  the  by-laws  of  the 
association.' 

Sec.  4.  Character  of  By-Laws.  Too  much  care  can- 
not be  exercised  in  their  construction,  for  the  association,  as 
well  as  the  member,  is  bound.  In  framing  by-laws,  assistance 
"will  be  had  in  consulting  the  by-laws  of  other  associations, 
adopting  a  clear,  concise  and  explicit  expression.  Nothing 
should  be  left  in  doubt  as  to  meaning.  As  a  general  rule  for 
guidance,  the  by-laws  must  be  reasonable,  equitable,  and  con- 
sistent with  the  purposes  of  the  association.  They  must  not 
be  contrary  to  public  policy  or  the  established  law  of  the  land. 
Neither  must  they  attempt  to  oust  the  jurisdiction  of  the 
courts  by  prohibiting  an  aggrieved  party  from  seeking  legal 
remedies  beyond  the  jurisdiction  of  the  corporation.'  There  is 
no  objection  to  the  rules  providing  for  settlement  of  disputes 
between  the  association  and  its  members  by  arbitration,  a  prac- 
tice common  to  English  societies,  but,  if  adopted,  it  should  be 
considered  only  a  means  of  ascertainment,  and  not  the  final 
determination  of  the  dispute.  The  authority  to  pass  by-laws  is 
an  authority  to  pass  such  only  as  are  consistent  with  the 
articles  of  incorporation  and  the  statute.'  There  are  limits 
beyond  which  the  corporation,  by  its  by-laws,  cannot  go.  For 
instance,  the  amount  of  fines  must  be  reasonable.  The  delin- 
quent cannot  be  fined  twice  for  the  same  offense.*  A  building 
association  cannot,  by  a  by-law,  compel  its  stockholders  to  offer  a 
premium  for  priority  of  payment  after  its  shares  have  become 
worth  par.'     A  by-law  providing  that  each  member  shall  sign 

'  Hagerman  v.  Ohio,  etc.,  Associ-  *  Hagermaa  v.   Ohio,  etc.,   Asso- 

ation,  25  Ohio  St.  1S6 ;  Morrison  v.  ciatioti,  25  Ohio  St.  186 ;  Forest  City, 

Dorsey,  48   Md.,  461.    After  enjoy-  etc..    Association  v.   Gallagher,  25 

ing  benefits  for  years,  member  can-  Ohio  St.,  208. 

not    Bay    he  did  not  sign  bylaws:  *  Rodgers  v.  Building  Association, 

Parker  v.  United  States,  etc.,  Asso-  7  W.  N.  C,  (Pa)  95;  see  Building 

ciation,  19  W.  Va.,  744.  Association  v.  Jones,  2  L.  T.  N.  S., 

«  Bauer    v.    Samson    Lodge,   102  (Pa.)  17. 
Ind.,  262. 

»  Bergman  v.  St.  Paul,  etc.,  Asso- 
ciation, 29  Minn.,  275. 


30  BUILDING    ASSOCIATIONS. 

a  certaiQ  instrument  containing  an  obligation  to  obey  the 
charter  and  laws,  is  only  directory.  If  a  person  becomes  the 
owner  of  stock,  he  acquires  membership  without  signing  any 
agreement  whatever.'  These  are  examples  showing  a  violation 
of  the  general  principles  cited  as  those  guiding  framers  of  by- 
laws. The  by-laws,  by  operation  of  law,  become  a  part  of  the 
contract  between  the  association  and  the  members.  They  may 
be  examined,  for  instance,  for  the  purpose  of  determining  when 
the  mortgage  contract  terminated.'  So  by-laws  defining  the 
duties  of  a  secretary  become  a  part  of  the  contract  of  the  sure- 
ties on  his  bond.'  This  fact  exerts  an  important  influence 
upon  the  right  to  amend  as  a  vested  right  cannot  be  impaired. 

Sec.  5.  Construction  of  By-laws.  The  construction 
of  by-laws  must  be  a  fair  one,  and  a  construction  which  would 
operate  with  harshness  and  oppression  upon  the  party  in 
default,  will  not  be  indulged  by  the  Courts.* 

If  a  by-law  consists  of  several  distinct  and  independent 
parts,  although  one  or  more  of  them  may  be  void,  the  rest 
are  equally  valid,  as  though  the  void  clause  had  been  omitted.* 
If  the  association  waive  the  rule  of  its  by-laws,  the  member 
violating  it  has  no  right  to  complain,  nor  has  any  other  person 
standing  in  the  relation  of  surety  for  him,  any  cause  of  com- 
plaint. So  a  member  holding  a  greater  number  of  shares  than 
is  allowed  by  its  by-laws,  but  not  in  excess  of  the  numbw 
limited  by  statute,  cannot  defend  against  a  claim  the  associa- 
tion has  on  account  of  such  shares.'  And  if  the  association, 
having  an  express  power  to  loan  money  upon  real  estate,  upon 
terms  prescribed  in  the  by-laws,  a  loan  not  in  conformity  with 
and  in  contravention  of  the  by-laws  is  not  void  as  ultra  vvr6%? 

Sec.  6.  Amendment  of  By-IjaTVS.  The  amendment 
of  by-laws  is  an  important  matter,  and  should  be  carefully 

*  Building  Association  v.  Robin-  ^Monumental,   etc.,     Society     v. 

Bon,  46  L.  I..  (Pa.)  5.  Lewis,  38  Md.  445. 

'McCahan  v.  Columbian,  etc.,  Aa-  *Shelton  v.  Mayor  etc.,  30  Ala.  540. 

Bociatlon,  40  Md.  '';26.  *Hagerman  v.  Ohio,  etc.,  Associa- 

*Humboldt,   etc..  Society  v.  Won-  tion,  25  Ohio  St.  186. 

nerhold,  81  Cal.  528.  ^Kelly  v.  Mobile,  etc,  Aesociatlan, 

64  Ala.  601. 


AMENDMENT    OF    BY-LAWS.  31 

done.  Power  to  make  by-laws  implies  power  to  repeal  them.' 
By-laws  may  be  amended  so  as  to  effect  future  benefits  but  not 
vested  claims.'  Plaintiff  in  a  case  became  a  member  of  de- 
fendant building  association  at  a  time  when  a  by-law  thereof 
provided  that  all  non-borrowing  stockholders  wishing  to  with- 
draw, shall  be  privileged  so  to  do,  upon  giving  notice  to  the 
directors  of  his  or  her  intention,  and  shall  be  entitled  to  re- 
ceive the  amount  of  installments  actually  paid  in  without  in- 
terest. Held  that  plaintiff's  right  of  withdrawal  was  a  vested 
right,  of  which  defendant  could  not  deprive  him  without  his 
consent  by  a  subsequent  repeal  of  the  by-laws.* 

When  a  member  has  contracted  upon  the  faith  of  a  by-law, 
and  has  acquired  rights  under  it,  the  association  has  no  power 
to  change  the  by-law  so  as  to  affect  him.  The  by-law  became  a 
part  of  his  contract,  and  the  association  can  no  more  rescind 
that  part  of  his  contract  without  his  consent,  than  it  can  any 
other  part;  and  amendments  or  rules  made  after  the  contract, 
cannot  by  any  construction  have  an  ex  post  facto  effect,  when 
his  rights  would  be  thereby  impaired.*  Suppose  the  by-laws 
provided  that  upon  the  payment  of  a  certain  amount,  the 
mortgagor  should  be  entitled  to  a  reduction  of  his  mortgage 
interest  and  premium.  The  association  has  no  legal  right  to 
subsequently  repeal  or  amend  that  by-law,  so  as  to  deprive  the 
mortgagor  of  his  beneht  thereunder.  He  had  executed  his 
mortgage  with  that  right  in  contemplation;  it  had  become 
vested  in  him,  and  the  association  cannot,  without  his  consent, 
wrest  it  from  him.     This  is  a  fair  illustration  of  the  rule.s 

'King  V.  Ashwell,  12  East,  23.  credit.     Auld    v.  Glasgow  etc.  So- 

*Stohr  V.  San  Francisco,  etc.,  8o-  ciety,  12  App.  Cas.  197.  So  where 
ciety,  82  Cal.  557 ;  Weise  v  San  a  by-law  provided  that  "all  non-bor- 
Francisco,  etc..  Society,  lb.  646.  rowing  members  wishing  to  with- 

"Holyoke  etc.  Association  v.  Lew-  draw  shall  be  privileged  so  to  do 
in,  27  Pac.  R.  873.  upon  giving  notice  to  the  directors 

^Christie  v.  Northern  Counties,  of  his  or  her  intention,  and  shall  be 
etc..  Society,  L.  R  ,  43  Ch.  Div.  62.  entitled  to  receive  the  amount  of  in- 

*Other  illustrations:  Where  ma-  stallments  actually  paid  in  without 
jority  of  members  in  a  depreciated  interest.  Held,  that  the  member's 
association  passed  a  rule  that  a  cer-  right  of  withdrawal  was  a  vested 
tain  amount  should  be  deducted,  it  right  of  which  defendant  could  not 
has  held  ultra  vires,  and  members  deprive  him  without  his  consent  by 
who  had  given  notice  of  withdrawal  a  subsequent  repeal  of  the  by-law: 
after  the  resolution,  were  entitled  to  Holyoke,  etc.,  Association  v.  Lewis, 
be  paid  the  whole  amount  at  their      27  Pac.  R.  872. 


32  BUILDING    ASSOCIATIONS. 

But  amendments  having  a  retroactive  effect,  apply  fully, 
unless  a  right  vested  under  prior  laws  is  impaired.  A 
constitution  originally  provided  that  a  member  whose  shares 
were  unpledged  for  loans,  might  give  notice  of  withdrawal,  at 
any  time,  and  that  from  and  after  such  notice,  all  dues  on  such' 
shares  should  cease.  In  June,  1876,  all  holders  of  unpledged 
shares  gave  notice  of  withdrawal,  and  thereupon  the  section  of 
the  constitution  requiring  the  payment  of  dues  on  shares,  was 
amended  so  as  to  provide  that  no  dues  be  thereafter  required 
from  the  unpledged  shares.  Another  amendment  was  also 
then  adopted,  changing  the  manner  in  which  withdrawal 
shares  were  to  be  paid  off,  instructing  the  directors  to  close 
the  business  of  the  association.  Held,  by  the  court,  that  these 
amendments  in  no  manner  changed  the  contracts  evidenced' 
by  the  note  and  mortgage  or  released  either  party  from  any 
obligation  thereon.'  While  amendments  not  impairing 
vested  rights  may  be  made  to  have  a  retroactive  effect,  yet 
they  must  be  brought  to  the  knowledge  of  each  member  to 
bind  him. 

Sec.  7.    Resolutions  and  Amendments.    The  rule 

that  a  by-law  cannot  be  passed  so  as  to  impair  a  vested  right, 
applies  to  resolutions  of  a  board  of  directors.*  A  resolution 
of  a  building  association  providing  that  the  value  of  all  stock 
borrowed  on  to  a  certain  amount,  should  be  allowed  to  such 
holders  as  wished  to  redeem,  can  not  be  rescinded  to  the  pre- 
judice of  a  member  who  has  made  application  to  withdraw 
and  had  refrained  from  paying  his  monthly  dues  in  the  belief 
that  his  application  had  been  accepted.'  A  resolution  permit- 
tin  o-  borrowers  to  withdraw  on  certain  terms,  the  stock  to  be 
cancelled,  when  acted  on  by  a  member,  is   conclusive   on  the 


•  Hekelnkaemper  v.  German,  etc.,  Northern  Counties,  etc.,  Society,  L. 

Association,  22  Kan.  549.  R  43  Ch.  D.  62. 

«  Neitiier  rules  nor  resolutions  can  «  Eyre  v.  Building  Association,  IT 

have  an  ex  post  facto  effect,  when  l.  I.  (Pa.)  148. 
rights   are   impaired:    Christie    v. 


PROVISIONS    OF    BY-LAWS.  33 

association;  it  amounts  to  an  accord  and  satisfaction.'  The 
rules  must  be  in  conformity  with  the  by-laws  and  charter.  In 
the  management  of  the  association,  unwritten  regulations 
sometimes  govern,  simply  because  they  are  reasonable  and 
have  been  acted  on  by  the  members,  but,  if  they  are  inequit- 
able, the  courts  will  not  enforce  them.' 

Sec.  8.  Mode  of  Amendments.  The  mode  of 
amendment  prescribed  in  the  statute,  charter,  or  by-laws, 
themselves,  must  be  strictly  followed,  or  the  amendment  is 
nugatory.*  The  by-laws  usually  provide  how  and  when  thej 
may  be  amended;  in  such  case,  the  procedure,  as  defined, 
must  be  followed. 

The  by-laws  should  not  be  incorporated  in  any  part  of  the 
charter,  and  the  rules  of  the  association  should  be  kept  dis- 
tinct from  the  by-laws.  This  is  especially  necessary,  as 
amendment  of  the  by-laws  may  be  attended  with  delay.  The 
association  needs  a  simple  code  of  rules,  governing  the  man- 
ner of  making  loans,  and  their  payment,  and  such  other  mat- 
ters as  relate  to  its  routine  business.  The  directors  may 
amend  these  rules  upon  the  principles  that  by-laws  are 
amended. 

Sec.  9.  Provisions  of  By-Laws.  In  its  by-laws, 
the  association  should  specify  the  character  of  its  shares 
and  the  manner  of  their  issue;  its  officers,  the  mode  of 
election,  term  of  office,  and  the  manner  of  tilling'  vacan- 
cies; the  duties  of  the  officers;  the  place  and  time  of 
annual  meetings  of  shareholders,  and  regular  meetings  of 
stockholders;  the  manner  of  calling  special  meetings  of 
stockholders  and  directors;  the  number  necessary  to  con- 
stitute a  quorum;  the  appointment  of  an  auditing  com- 
mittee, and  such  other  committees  as  may  be  nec- 
essary;   the    seal  to   be  used  by   the  association;   the  fine 

•Miller  V.  Second  Jefferson,  etc.,  interest  on  money  bid,  when  th<? 

Association,  50  Pa.  St.  32.  loan  is  subsequently  refused,  is  not 

*  Winterer  v.   Building  Associa-  a  binding  custom, 

tion,  44  L.  I.  (Pa.)  122.     la  this  case  *McKeown  v.  Building  Associa- 

it  was  held  that  a  custom  to  charge  tion,  5  Bull.  52. 
3 


34  BUILDING     ASSOCIATIONS. 

and  other  charges';  transfer  fees;  dividends  and  manner  of  de- 
claring and  paying;  the  place  and  time  of  paying  dues ;  the  man- 
ner of  making  loans  and  the  security;  the  granting  of  with- 
drawals, with  the  notice  required,  and  manner  of  payment; 
the  replacing  of  lost  or  stolen  pass-books;  the  disposition  of 
the  stock  of  a  deceased  member,  and  making  of  amendments. 
These  are  generally  the  subjects  covered  by  the  by-laws. 

'  The  fine,  charges  and  forfeitures  can  protect  itself  sufficiently  against 

against  delinquent  members  must  be  the    acts    of    defaulting    members 

created  by  unambiguous  language,  without  applying  increased  penal- 

or  they  will  not  be  upheld:    Occi-  ties  or  forfeitures  of  stock,  their 

dental,  etc  ,  Association  v.  Sullivan,  omission  from  the  by-laws  in  an 

62Cal.  394.     When  the  association  equitable  one. 


CHAPTER  VI. 


GOYERNMENT  AND  OEFICERa 


Officers  and  election. 
Pass-books  and  dues. 
General  meetings. 
Special  meetings. 
Quorum.  Voting  and 

Objects    of   general 


Section  1. 

Section  3. 

Section  3. 

Section  4. 

Section  5. 
proxies. 

Section  6. 
meeting. 

Section  7.    Character,  duty  and 
liability  of  directors. 

Section  8.    General  guidance  for 

directors. 

Section  9.    Minutes  of  meetings. 

Section  10.    Powers   of    direc- 
tors. 

Section  11.    Term  of  election  of 
directors. 

Section  13.    Duties  of  president. 

Section  13.    Duties  of  vice-pres- 
ident. 


Section  14.    Duties  of  secretary 

Section  15.    Duties  of  treasurer. 

Section  16.    Duties  of  attorney. 

Section  17.  Appraising  com- 
mittee. 

Section  18.  Per  centage  of  value 
to  be  loaned. 

Section  19.  Executive  commit- 
tee. 

Section  30.  Auditing  commit, 
tee. 

Section  31.    Officers' bonds. 

Section  22.  Sureties  on  official 
bonds. 

Section  23.  Resignation  and  re- 
moval of  directors. 

Section  24.  Officers'  relations 
and  responsibilities  to  the  associ- 
ation. 


Section  1.  Officers  and  Election.  The  association 
after  incorporation  and  adoption  of  by-laws,  should,  in  share- 
holders' meeting,  elect  officers  to  serve  until  the  next  general 
meeting.     The  officers  to  be  elected  are,  ordinarily,  president, 

(35) 


36  BUILDING    ASSOCIATIONS. 

vice-president,  secretary,  treasurer  and  attorney.  If  the  busi- 
ness requires,  assistant  officers  may  be  elected.  Tlie  mode  of 
election  is  by  ballot.  The  manner  of  election  and  time  of 
holding  should  be  prescribed  in  the  by-laws.  After  the  elec- 
tion of  the  officers,  two  of  them  at  least  should  give  bond,  the 
secretary  and  treasurer,  with  sureties  satisfactory  to  the  direc- 
tors. This  is  pre-requisite  to  their  entering  upon  the  discharge 
of  their  duties. 

Seo.  2.  Pass  Books  and  Dues.  The  association  then 
issues  its  pass  books  and  certificates  of  stock,  and  is  ready  for 
receiving  dues.  The  by-laws  should  fix  the  time  in  the  week 
or  month  when  dues  are  to  be  paid,  having  reference  to  the 
time  when  shareholders  can  best  pay  them.  In  factory  towns, 
Monday  evening  may  be  the  best  time,  and  in  railroad  centers 
a  monthly  payment  would  be  convenient.  By  adjusting  these 
pay  times,  the  association  will  accommodate  its  members  and 
strengthen  its  membership.  If  the  person  selected  as  secretary 
has  a  convenient  office,  the  association  might  receive  dues  at 
all  times,  with  the  express  stipulation  that  they  must  be  paid 
before  the  expiration  of  the  week  or  month,  as  the  case  may  be. 
Whenever  the  business  will  justify,  the  association  should 
have  its  own  office,  a  place  where  the  shareholder  feels  he 
may  come  at  any  time  and  have  inquiries  answered  and  make 
such  examination  of  the  workings  of  the  society  as  he  desires. 

Sec.  3.  General  Meetings.  The  supreme  power  in  the 
management  of  the  affairs  of  the  association  is  vested  by  law 
in  the  stockholders  assembled  in  general  meeting.  This  power 
must  be  exercised  with  regard  to  the  statute,  but  it  cannot  be 
defeated  by  rules  adopted  by  the  corporate  directors.  The 
general  meetings  should  be  held  annually  and  properly  occur 
shortly  after  the  end  of  the  fiscal  year,  allowing  time  enough 
for  the  officers,  after  the  close  of  the  year,  to  balance  their  books 
and  submit  their  annual  reports.  If  the  association  makes 
semi-annual  reports,  the  general  meeting  can  be  held  after  the 
last  half  of  the  year.  The  stockholders  do  not  generally  attend 
these  meetings  as  they  should,  and  the  directors  should  place 
in  the  hands  of  each  shareholder  a  copy  of  the  report  of  the 
affairs  of  the  association.     The  date  of  the  general  meeting 


QUORUM VOTING    AND    PROXIES.  37 

should  be  lixed  by  the  by-laws,  when  the  business  to  be  done 
by  the  stockholders  may  be  transacted.  Then  all  members  are 
affected  with  notice  of  the  general  meeting  and  are  bound  by 
the  acts  of  the  meeting,'  but  the  by-law^  must  fix,  also,  the 
hour  of  tlie  meeting.'  If  the  by-law  make  no  such  provision, 
the  shareholder  is  entitled  to  personal  service.'  Unless  the 
meeting  is  held  at  the  proper  place,  as  indicated  by  the  by-laws, 
the  measures  taken  will  be  of  no  validity.*  The  meeting  must 
be  held  in  the  locality  of  the  shareholders.' 

Sec.  4.  Special  Meeting's.  If  the  meeting  is  a  special 
one,  or  there  are  special  and  unusual  matters  to  be  considered 
at  the  general  meeting,  notice  specifying  the  time  (giving  the 
hour),  place  and  nature  of  the  business  of  the  meeting,  should 
be  giv^en  to  each  stockholder  and  the  by-laws  should  pro- 
vide for  such  notice  and  the  manner  of  its  issuing,  as  the 
notice  is  absolutely  essential  to  the  validity  of  the  meeting. 
The  by-laws  should  provide  that  the  president  and  secretary 
shall  issue  a  call  for  special  meetings,  upon  the  request  of  a  cer- 
tain number  of  stockholders.  The  notice  must  then  be  issued, 
as  provided  by  the  by-laws,  and  served  on  each  stockholder  a 
reasonable  time  before  the  meeting.  The  notice  may  be  served 
in  any  manner  that  will  reach  the  shareholders,  as  by  mail, 
which  is  the  usual  method.  A  special  meeting  can  only  do  the 
business  for  which  it  was  called,  and,  upon  adjournment,  the 
shareholders  may  do  those  things  which  they  were  authorized  to 
do  at  the  original  meeting,*  but  no  new  business  unless  notice  is 
given.''     The  same  rules  apply  to  the  meetings  of  directors. 

Sec.  5.  Quorum — Votiugr  aud  Proxies.  Where  there 
is  no  provision  in  the  statute  or  by-laws  to  the  contrary,  the 
acts  of  the  majority  present,  at  a  properly  called  meeting,  are 
binding,  if  there  is  a  quorum  present.  And  in  estimating 
a  majority  of  the  quorum  present,  a  majority  of  those  voting 
will  be  counted,  so  that  members  cannot  by  abstaining  from 

'  •  State  V  Bonnell,  35  Ohio  St.  10.  '  Reg.  v.  Registrar  of  Friendly  So- 

'San  Buenaventura,  etc  ,  Company  ciety,  7  L.  R.,  Q.  B.  741. 

V.  Vassault,  50  Cal.  534.  «Cook  Stock,  etc.,  Sec.  601. 

»Stebbins  v.  Merritt,  10  Cush.  27.  'Reg  v.  Grimshaw  10  Q.  B.  747. 
*Reg  V.  Pratt,118E.  C.  L.6B.&S. 

Q.  B.)  672. 


38 


BUILDING    ASSOCIATIONS. 


voting,  defeat  the  power  of  the  meeting.  If  they  refuse  to  vote, 
the  majority  of  those  voting  will  determine  the  question  involved 
and  be  binding  on  the  association.  If  members  are  present  but 
refuse  to  vote  or  take  any  part,  yet  they  will  be  counted  for  the 
purpose  of  having  a  quorum.'  The  vote  must  be  cast  in  person 
unless  proxies  are  authorized  by  the  by-laws.  It  requires  special 
authority  in  the  by-laws  for  the  use  of  proxies,  unless  the  statute 
authorizes  them.'  It  is  a  tacitly  accepted  custom  in  absence  of 
any  regulation  on  the  subject,  that  a  member  has  but  one  vote, 
independently  of  the  number  of  shares  he  holds,  a  custom  which 
seems  to  be  founded  on  the  strictly  co-operative  character  of 
the  scheme.'  In  those  states  where  the  borrower's  stock 
interest  is  extinguished,  he  then  loses  his  right  to  vote.* 

Sec.  6.  Objects  of  General  Meeting.  The  usual 
objects  of  a  general  meeting  are  to  elect  officers,  to  receive 
statement  of  the  association's  condition,  to  pass  by-laws 
and  to  determine  upon  the  general  policy  of  the  association. 

Sec.  7.  Character,  Duty  and  Liability  of  Direc- 
tors. The  Board  of  Directors  has  the  supervision  and  man- 
agement of  the  affairs  of  the  association,  and  as  a  body,  acts 
as  its  agent.'  It  is  elected  by  the  stockholders,  and,  in  a  sense, 
the  members  are  trustees  for  the  stockholders.'     The  rules 


•Rushville  Gas  Company  v.  City 
of  Rushville,  131  Ind.  206. 

■■'Craig  V.  First  Presbyterian 
Churcli,  88  Pa.  St.  43 :  Davis  Building 
Society,  101.  A  duly  incorporated 
church,  owning  shares  which  it  is 
entitled  to  vote  at  an  election  of 
officers,  may  do  so  by  proxy  duly 
authorized  by  the  Board  of  Trus- 
tees: State  V  RohlfEs,  19  Atl.  R. 
1099. 

sEndlich  Building  Associations, 
sec.  113. 

♦Mechanics,  etc.,  Association  v. 
Conover,  1  McCart.  219.  In  Vir- 
ginia he  loses  his  vote :  Winchester, 
etc.,  Association  v.  Gilbert,  23  Grat. 
7b7.  While  in  Michigan,  the  statute 
divests  him  of  the  right,  although 


he  remains  a  member  and  debtor. 
Mich.  etc.  Association  v.  McDevitt, 
77  Mich  1. 

*Allen  V.  Curtis,  36  Conn.  456. 

^Thompson's  Liabilities  of  Officers 
and  Agents  351;  Hodges  v.  New 
England  Screw  Company,  53  Am. 
Dec.  637,  note.  Officers  of  a  build- 
ing association,  although  trustees  of 
the  property  of  the  association  do 
not  occupy  that  relation  toward  one 
to  whom  they  sell  their  individual 
stock,  and  therefore  if  they  make 
representations  to  him  as  to  its 
value,  which  do  not  turn  out  as  ex- 
pected and  represented,  they  are 
not  liable  in  the  absence  of  an  alle- 
gation of  deceit:  Cook  v.  Henderson, 
8  Rec.  (Ohio)  439. 


DUTY    AND    LIABILITY    OF    DIRECTORS.  39 

shonld  prescribe  their  duties.  Generally  the  directors  elect  the 
officers  of  the  association  and  pass  upon  loans  and  transact 
whatever  business  is  of  interest  to  the  association.  While  the 
board  is,  in  a  sense,  trustee  and  agent,  it  can  only  bind  the 
association  in  the  scope  of  the  corporate  business,  and  this  is 
true  of  officers.  The  directors  are  only  held  to  the  exercise 
of  reasonable  care  and  diligence  in  the  management  of  the 
corporate  affairs,  as  it  is  conferred  on  them.'  If  they  act 
beyond  the  corporate  power'  or  fraudulently,'  or  misapply  the 
funds,*  or  are  guilty  of  gross  negligence  and  inattention  to 
duty,'  they  may  be  personally  liable  either  to  stockholders  or 
creditors  of  the  corporation,  when  injury  results.*  Thus,  man- 
agers of  an  association  are  not  personally  liable  for  losses  result- 
ing from  an  honest  mistake  in  estimating  the  value  of  the 
Btockholder's  lands  on  which  they  loaned  money,  nor  for  a 
defect  in  the  ackowledgement  of  a  mortgage  which  rendered 
it  worthless.  But,  they  are  liable  for  losses  from  loans  made 
on  personal  security  of  the  stockholders,  in  violation  of  a  by- 
law limiting  the  amount  of  such  loan.''  Any  member  mav 
compel  the  directors  to  keep  within  the  corporate  powers.' 
Certainly,  a  director  is  not  liable  for  a  breach,  or  act  beyond 
the  corporate  power,  or  improvident  act,  committed  by  his  co- 
directors,  when  he  was  not  present  when  it  was  decided  upon, 

'Sullivan  v.  Lewiston  Institution  the  powers  given  to  him  by  the  rules 
for  Savings,  56  Me.  507.  It  has  of  the  society.  Held  that  this  rule 
been  recently  held  that  -where  their  did  not  apply  to  acts,  ultra  vires  and 
services  are  gratuitous,  they  do  not  beyond  the  powers  which  the  soci- 
owe  creditors  of  the  corporation  such  ety  itself  could  confer:  Cullernev. 
care  as  a  reasonably  prudent  man  London,  etc..  Society,  L.  R.  35  Q  B. 
exercises  in  his  own  business,  but      Div.  485. 

are  liable  only  for  such  gross  neg-  ^Koehler  v.  Black  River  Falls,  etc., 

ligence  as  amounts  to  fraud :  Swent-      Company,  2  Black,  7,  715. 
Kel   Penn.  Bank,  23  At  1  Hep  405.  '*Bank,etc.,  v.  St.  John,2o  Ala.  5(56, 

This  decision  relaxes  the  rule  here-  611 ;  Citizens,  etc..  Association  v. 
tofore  applied.  Lyon,  29  N.  J.  Eq.  110. 

*Moses  V  Ocoee  Bank,  1  Lea,  398.         *Robinson  v.Smith,24  Am  Dec.213. ' 
A  rule  of  a    building    association  *Hodges  v.  New  England  Screw 

provided  that  a  director  should  not      Company,  53  Am.  Dec.  637,  note, 
be  answerable  for,  and  might  reim-  'Citizens,  etc.,  Association  v.  Cori- 

burse  himself  for,  any  loss  which      ell,  34  N.  J.  Eq  3:^3. 
m^ight  happen  in  the  execution  of  *Davis  Building  Society,  120. 


40  BUILDING    ASSOCIATIONS. 

took  no  part  in  it  and  had  no  knowledge  of  it,  unless  he  might 
have  prevented  it  by  ordinary  attention  to  his  duties.*  He 
cannot,  by  absenting  himself  from  his  duties,  avoid  the  respon- 
sibilities of  them.  If  he  has  been  guilty  of  a  legal  fraud  on 
the  association,  whether  intended  or  not,  he  cannot  share  in  the 
assets  with  other  members.'  The  directors  cannot  bind  the 
association  by  mere  expression  of  opinion  concerning  its  work; 
as,  when,  in  a  laudatory  statement  they  set  out  the  advantages 
of  the  association,  one  claiming  to  be  misled  thereby,  who  had 
a  copy  of  the  by-laws,  in  which  were  fully  stated  the  rights 
and  obligations  of  members,  cannot  rescind  his  contract  on 
the  ground  of  fraud;'  nor  do  expressions  of  opinions  as  to  the 
maturity  of  shares  amount  to  a  fi"aud  entitling  the  party  relying 
thereon  to  relief  in  equity.* 

Sec.  8.  General  Guidance  for  Directors.  The 
plain  rule  for  the  guidance  of  the  board  of  directors  is,  that  it 
must  act  at  a  regular  or  legally  called  meeting,  within  the 
powers  conferred  on  it,  and  each  director  must  exercise  honesty 
and  ordinary  care  in  attending  to  the  corporate  business.  No 
liability  will  then  attach  to  him.  Tlie  chief  difficulty  that  a 
director  encounters  is  to  determine  what  powers  are  conferred 
upon  him,  as  a  director.  Each  member  of  the  board,  in  order 
that  he  may  properly  interpret  the  by-laws  touching  his  duties, 
should    study    the    scheme    of     building     associations    and 

'Sperings  Appeal,  71  Pa.  St.  11.  ful  act  of  those  directors  only  who 

Directors  of  a  building  association  made    the    advance:     Cullerne    v. 

passed  a  resolution  authorizing  ad-  London,  etc.,  Society,  L.  R.  25  Q.  B. 

vances  to  members  on  the  security  Div.  485.    As  to  who  may  enforce 

of  their  shares     An  advance  was  the  liability  against  a  delinquent  di- 

accordingly  made  to  a  member,  and  rector,  see  Hodges  v.  New  England 

the  society  incurred  a  loss  thereby.  Screw  Company,  53  Am.  Dec.  637, 

Held  that  a  director  who  concurred  note. 

in  the   resolution,  but  was  not  a  *  Kisterbock's  Appeal,  51   Pa.  St. 

party  to  the  making  of  the  advance,  483. 

could  not  be   held  liable  to  the  so-  *  Winget  v.  Quincy,  etc.  Associa- 

ciety   for  the  loss,  on  the  ground  tion,  128  111.  67 ;  See  also  Quincy,  etc. 

that  the  advance  was  tiUra  vires  and  Association  v.  Winget,  29  IlL  App. 

was  not  attributable  to  the  illegal  173. 

resolution  which  authorized  it,  as  *Lake  v.  Security,  etc.,  Associa- 

the  cause  of  the  loss  was  the  wrong-  tiou,  72  Ala.  207. 


POWERS    OF    DIRECTORS.  41 

particularly,  that  of  his  association.  lie  will,  then,  better  under- 
stand his  duties.  Generally  speaking,  the  directors  have  the 
management  of  the  affairs  of  the  association  through  its 
officers.  That  management  is  to  be  conducted  by  such  rules 
us  will  accomplish  the  purposes  of  the  association.  They  are 
entitled  to  exercise  such  powers  as  are  given  them  by  statute 
and  by-laws  and  such  other  incidental  powers  as  are  necessary  to 
accomplish  its  lawful  purposes.  A  legal  meeting  implies  that 
a  quorum  is  present.  If  the  number  constituting  a  quorum 
is  fixed  by  the  by-laws,  and  it  should  be,  that  determines  it. 
If  there  is  no  provision,  a  majority,  usually,  constitutes  a  quo- 
rum, and  when  a  quorum  is  present,  a  majority  of  the  quorum 
voting  binds  the  association. 

Sec.  9.  3Iiiiutes  of  3Ieetinjj:s.  Minutes  of  the  direc- 
tors' meetings  should  be  kept  b}'  the  secretary,  signed  by  him, 
and  attested  by  the  president.  It  is  essential,  that  the  official 
acts  of  the  directors  be  thus  recorded,  as  in  case  of  any  litiga- 
tion, the  minutes  may  become  important  evidence.  The  value 
of  permanent  recording  of  corporate  acts  can  not  be  over- 
estimated. 

Sec.  10.  Powers  of  Directors.  The  directors  having 
the  power  to  make  such  contracts  as  are  authorized  by  the 
statute  and  by-laws,  the}''  should  in  such  contracts  make  it 
clearly  appear  that  they  act  as  the  agent  of  the  association. 
So  a  note  signed  by  individuals,  as  directors  or  officers,  is  the 
individual  note  of  the  makers.'  The  contract  should  be  signed 
by  the  corporate  name  by  the  proper  officers.  Then,  it  is  the 
contract  of  the  association.  The  right  of  the  directors  to 
■delegate  to  agents  the  transaction  of  the  ordinary  and  routine 
business  of  the  corporation,  is  unquestioned,  and  is  absolutely 
necessary.  But,  in  matters  involving  discretion,  the  decisions 
are  in  some  conflict,  but  the  better  weight  of  authority  is  that 
the  powers  of  the  board  may  be  delegated  to  an  executive  com- 
mittee  of  the   board,   and   the   acts   and   contracts  of    such 

'Hayes  v.  Brubaker,  65  Ind.  27.  by    defendant    corporation,  it    was 

But  where  a  contract  not  under  seal  held  enforceable  against  it:     Hand 

was  signed  "8.  Mathor,  President,"  v.  Society,  etc.,  18  N.  Y.,  Supl.  157. 
at  being  alleged  that  it  was  executed 


42  BUILDING    ASSOCIATIONS. 

committee  are  binding  on  the  association.'  It  very  often 
expedites  business  of  the  association  for  committees  to  attend 
to  certain  branches  of  it,  and  it  is  within  the  power  of  the 
board  to  create  such  committees. 

Directors,  personally  interested  in  a  resolution,  are  not  com- 
petent to  vote  thereon,"  nor  can  they  speculate  in  the  funds 
for  their  own  beneiit,^  nor  purchase  property  for  resale  to  the 
association  at  a  higher  figure,*  nor  enter  into  any  secret  agree- 
ments for  their  personal  profit.'  The  director's  individual 
transactions  with  the  corporation  are  viewed  with  suspicion 
and  to  be  upheld  by  the  courts  must  be  clear  of  any  advantage 
taken  by  reason  of  his  official  connection.' 

The  directors  must  grant  loans  conformable  to  the  by-laws 
and  rules,  and  where  they  do  not  specify,  the  conditions  are 
much  within  their  discretion.  If  the  attorney  pronounces  the 
title  defective,  the  association,  declining  the  loan  for  that 
reason,  cannot  be  compelled  to  grant  it.'  They  have  power, 
within  reasonable  discretion  to  remit  and  condone  tines,  and  to 
compromise  with  a  borrowing  member,  who  is  unable  to  pay.* 

Sec.  11.  Term  of  Election  of  Directors.  After 
the  election  of  directors,  at  the  general  meeting,  the  board  or- 
ganizes by  electing  ofiicers.  They  are  president,  vice-presi- 
dent, secretary,  treasurer  and  attorney.  Some  societies  will 
have  other  ofiicers,  as,  abstracter  and  appraisers.  They  are, 
however,  more  properly  employes  of  the  board.  The  director* 
may  be  elected  annually,  or  for  a  longer  term.  The  advan- 
tage of  an  annual  election  is  that   unsatisfactory  members  of 

1  Cook  Stock,  etc.,  sec.  715.  *  Twin- Lick      Oil      Company    v. 

*  Smith  V.  Los  Angeles,  etc.,  Asso-       Mai  bury,  91  U.  S.  587. 

ciation,  78  Cal.  289.  '  Conkliu  v.  Peoples,  etc.,    Asso- 

*  Redmond  v.  Dickerson,  1  Stock.  ciation,  41  N.  J  Eq.  20.  If  the  action 
507.  of  the  board  in  contracting  with  aa 

■*  Blake    v.  Bullalo  Creek  R.  R.  officer  outside  of  his  duties  is  rati- 

Compan}',  66  N.  Y.  485;  European,  fied  by  the  stockholders  and  no  one 

etc.,  R.  R.  Company  v.  Poor,  59  Me.  else  is  affected,  it  will  become  valid : 

277.  Building   Association  v.   Goldbeck,, 

5  Farmers',  etc.,  Bank  v.  Downey,  13  W.  N.  C  24. 

53  Cal.  4G*i;   P.inL:boin  v.   Citizens,  "People   v.  Lowe,  117  N.  Y.  175. 
etc.,  Association,  35  N.  J.  Eq.  341. 


DUTIES    OF    SECRETARY.  43 

the  board,  or  any  officer,  may  be  dropped  without  any  trouble. 
Building  association  officers,  if  they  attend  to  their  duties,  are 
usually  kept  in  charge,  year  after  year.  The  stockholders  are 
averse  to  changes  so  long  as  the  affairs  of  the  association  are 
properly  managed.  Sometimes,  one  part  of  the  directors  is 
elected  for  one  year,  another  for  two  years,  and  a  third  for 
three  years.  The  advantage  of  this  is,  that  outgoing  directors 
always  leave  directors  in  charge  who  are  familiar  with  the 
business.  Any  vacancy  in  the  directory  should  be  tilled  by  the 
directors,  the  appointee  to  hold  until  the  next  general  meeting. 

Sec.  12.  Duties  of  President.  The  duties  of  the  presi- 
dent arc  to  preside  at  all  meetings  of  the  stockholders,  and  of 
the  board  of  directors;  to  call  special  meetings,  unless  the  by- 
laws otherwise  provide;  to  sign  all  certificates  of  stock,  and  all 
drafts  drawn  on  the  treasurer  for  whatever  purpose;  to  execute 
all  satisfactions  of  mortgages  when  paid;  to  make  all  convey- 
ances of  property  owned  by  the  association,  M'hen  sold  by  order 
of  the  board  of  directors;  and  to  sign  all  contracts.  He  should 
be  custodian  of  the  bonds  of  the  officers  of  the  association.  He 
should,  also,  appoint  an  auditing  committee  to  serve  at  such 
times  and  in  manner  prescribed  by  the  by-laws,  and  also 
appoint  such  other  special  or  standing  committees  as  theboard 
may  designate  from  time  to  time.  He  is  also  custodian  of 
the  corporate  seal,  if  one  is  used. 

Sec.  13.  Duties  of  Vice-President.  The  vice-presi- 
dent should  perform  all  the  duties  and  have  all  the  powers  of 
the  president,  during  the  absence  or  disability  of  the  latter. 

Sec.  14.  Duties  of  Secretary.  The  secretary  is  often 
the  real  manager  of  the  association;  and  the  supervision  of 
the  board  of  directors  is  too  often  nominal.  It  follows,  that 
his  office  is  the  important  one  in  the  association,  and  should  be 
occupied  by  a  fit  person.  The  general  duties  of  the  secretary 
are  1o  attend  to  the  correspondence,  keep  the  minutes  and  the 
accounts  of  the  association,  sign  all  certificates  of  stock  and 
other  instruments  provided  in  the  by-laws,  submit  reports  of 
the  affairs  of  the  association,  sign  all  drafts  drawn  on  the 
treasurer  for  the  payment  of  money  belonging  to  the  associa- 
tion, and  act  as  the  custodian  of  all  notes,  bonds,  mortgages, 


44  BUILDING   ASSOCIATIONS. 

deeds,  and  other  legal  papers  belonging  to  the  association. 
Sometimes,  as  a  matter  of  convenience,  he  will  pay  money  on 
loans,  especially,  on  loans  where  periodical  paj^ments  are  made. 
This  is  merely  for  the  convenience  of  the  member  or  the  treas- 
urer, and  should  not  be  declared  a  part  of  his  duties  by  the 
by-laws.  In  thus  acting  without  the  scope  of  his  duties,  he 
cannot  bind  the  association,  without  authority  of  the  directors. 
When  a  loan  has  been  granted,  upon  the  appraisement,  and  upon 
the  opinion  of  the  attorney  that  the  title  is  sufficient,  and  all 
papers  have  been  executed  by  the  borrower,  the  secretary  issues 
a  warrant,'  signed  by  the  president,  upon  the  treasurer,  direct- 
ing him  to  pay  out  the  money  on  the  loan.  Care  must  be 
exercised,  that  all  liens  on  the  property  mortgaged  are  dis- 
charged and  satisfied  of  record,  before  any  money  is  paid  to 
the  borro\yer;  or  if  the  loan  is  a  building  one,  the  proper 
application  of  the  money  will  have  to  be  attended  to.  This 
work  naturally  falls  within  the  province  of  the  secretary.     . 

The  directors  should  examine  the  books,  at  frequent  times, 
however  much  confidence  they  may  have  in  the  officer.  The 
secretary  should  give  a  bond,  for  the  faithful  performance  of 
his  duties,  payable  to  the  association,  and  approved  by  the 
directors.  The  secretary  of  a  building  association  is  only 
required  to  use  ordinary  care — that  is,  such  as  a  prudent  man 
wouM  exercise  in  his  own  business — as  to  money,  or  property 
coming  into  his  hands,  as  such  officer,  and  if  he  uses  such 
care,  he  will  not  be  liable  for  the  loss  of  any  such  money,  or 
property." 

Sec.  15.  Duties  of  Treasurer.  The  treasurer  should 
have  charge  of  the  funds  of  the  association,  and  be  responsible 
for  their  proper  disbursement-  He  should  disburse  the  funds 
upon  warrants  issued  to  him,  duly  signed  by  the  President, 
and  attested  by  the  secretary,  or,  as  authorized  to  be  issued  by 
the  by-laws.  When  he  is  directed  by  the  by-laws  to  pay  out 
money  upon  warrants  bo  issued,  he  is,  thereby,  protected.     If 

'This  warrant  is  not  a  negotiable  lia,  etc.,  Association,  9  Luz.   Leg. 

Becurity  but  subject  in  any  holder's  Reg.  (Pa.)  41. 

hands  to  all  the  equities  of  the  asso-  •Mowbray  v.  Antrim,  123  Ind.  24. 
ciation :  Ashland,  etc.,  Co.  v.  Centra- 


DUTIES   OF   ATTORNEY.  45 

the  warrant  was  improperly  issued,  the  liability  attaches  to 
the  issuing  officer.  He  should  deposit  the  money  of  the  asso- 
ciation not  ready  for  disbursement,  in  a  bank  selected  by  the 
directors  as  the  depository,  and,  if  a  loss  follows,  as,  by  failure 
of  the  bank,  no  liability  will  then  attach  to  him.  In  accepting 
payments  from  members,  or  remittances  from  the  secretary  on 
account  of  such  payments,  he  should  require  cash,  and  not  any 
other  form  of  payment;  for,  if  there  is  a  loss,  he  has  exceeded 
his  authority  to  that  extent,  and  the  loss  falls  upon  him.'  He 
should  submit  a  report,  at  stated  times,  of  the  finances  of  the 
association  and  he  should,  also,  give  bond  for  the  faithful 
discharge  of  his  duties  and  accounting  of  the  funds  in  his 
hands.  The  treasurer  is  only  bailee  of  money  he  receives 
on  account  of  the  society,  and  does  not  become  a  debtor  of  the 
society,  and,  consequently,  if  he  is  robbed  of  its  money,  he  is 
discharged  from  liability  to  repay  the  amount  of  the  robbery. 
Sec.  16.  Duties  of  Attorney.  The  attorney  is  the 
examiner  of  the  abstracts  of  title  of  property  offered  as 
security,  and  other  papers  relating  thereto.  It  is  his  duty  to 
prepare  all  mortgages,  bonds,  affidavits  and  other  instruments 
necessary  in  making  loans,  and,  in  substance,  attend  to  all 
legal  business  of  the  association.  He  must  do  his  work  bona 
fide  to  the  best  of  his  skill  and  with  an  ordinary  degree  of  dili- 
gence, or  he  will  be  answerable  in  damages;  for  example,  if  he 
rely  on  an  extract  from  a  will,  in  examining  the  abstract, 
instead  of  examining  the  whole  will,  lie  is  guilty  of  gross 
negligence  and  is  liable.*  The  fees  of  the  attorney  are  usually 
paid  by  the  borrowing  member,  and  are  not  as  large  as  are, 
usually,  charged  for  like  services  in  a  professional  way,  but 
there  is  a  certainty  of  pay  and  the  quantity  of  work  is  often 
considerable,,  so  that  the  fees  are  compensatory.     The  legal 

'People's,    etc.,     Afisociation    v.  damage  sustained  by  the  dues  and 

Wroth,  43  N.  J.  L.  70.    And  the  fact  fines  not  being  received :  lb ;  Mutual, 

thatthe  executive  officers  were  pres-  etc.,  Association  v.  Hammell,  lb.  78. 

ent  and  consented  to  payment  other  'Waiker  v.  British,  etc.,  Associa- 

than  by  cash,  will   not  relieve  the  tion  21  L  J.,  Q.  B.  257. 

treasurer's  sureties.     The  rule  for  "Wilson  v.  Tucker,  3  Stark.  154; 

making  the  assessment  would  be  the  see  Davis  Building  Society,  126. 


46  BUILDING    ASSOCIATIONS. 

contracts,  sucli  as  bonds  and  mortgages,  are  usually  printed, 
and  there  being  only  blanks  to  fill  in,  much  work  is  saved. 

Sec.  17.  Appraising  Comraittee.  The  President 
should  appoint  an  appraising  committee.  Very  much  of 
the  association's  safety  depends  upon  the  wise  and  careful 
judgment  of  the  appraisers.  They  should  be  selected  with 
special  reference  to  their  caution  and  knowledge  of  values.  If 
appraisements  are  loosely  or  ignorantly  made,  the  keystone  of 
the  association  is  weakened,  and  the  entire  superstructure  is 
endangered.  The  appraisers  are,  usually,  paid  a  small  fee  by 
the  proposed  borrower 

Sec.  18.  Percentage  of  Value  to  be  Loaned.  A 
buildinff  association  can  loan  more  on  real  estate  than  an  ordi- 
nary  lender,  because  the  principal  is  in  effect  being  repaid 
weekly  or  monthly.  The  percentage  of  value  to  be  loaned  is 
not  settled.  Circumstances  may  safely  vary  any  rule,  as 
property  in  one  locality  is  of  a  more  stable  character,  or  the 
proposed  borrower  is  a  person  of  more  thrift  and  financial 
ability.  An  association  should  not  loan  in  excess  of  75  per 
cent,  of  the  value,  in  any  case.  If  there  is  a  default,  and  fore- 
closure, the  marginal  25  per  cent,  may  be  soon  taken  up  in 
costs  and  loss  of  premium.  Sixty-six  and  two-thirds  per  cent, 
is  a  safe  rule,  when  the  character  of  the  property  is  established  ; 
or  where  it  is  of  some  fluctuating  value,  50  per  cent  is  a  pru- 
dent per  cent.  The  by-laws  need  not  provide  for  any.  rule  on 
this  subject.  It  is  better  for  the  matter  to  be  left  to  the  dis- 
cretion of  the  board  of  directors.  The  appraisers,  by  swelling 
the  valuation,  could  easily  bring  a  loan  within  the  rule  if  they 
were  corruptly  disposed,  so  that  their  report  should  be  received 
in  an  advisory  way,  and  the  decision  of  the  matter  left  to  the 
board  of  directors,  upon  all  the  facts  of  the  case. 

•This  is  deemed  unwise  by  Mr.  have  a  sealed  report  from  the  ap- 

Davis  (Building  Society  p.  128)  as  praisers  for  confidential  use.    The 

there  might  be  a  collusion  between  borrower  would  not  then  know  what 

the  appraisers  and  borrowers.    In  valuation  was  placed  on  his  proper- 

the    writer's    opinion  there   is  not  ty  and  he  could  not  know  the  result 

so  much  danger  from  that  source  as  of  his  influence  for  high  appraise 

ihere  is  from  the  personal  relations  ments. 
of  the  parties.    It  would  be  wise  to 


.      SURETIES    ON    BONDS.  47 

Sec.  19.  Executive  Committee.  Sometimes  the  di- 
rectors delegate  to  an  executive  or  financial  committee  the 
work  of  passing  on  the  securities  offered.  This  committee 
should  organize  with  a  chairman,  and  the  secretary  of  the  asso- 
ciation should  act  as  ex-o-fficio  secretary  of  the  committee,  and 
keep  minutes  of  the  committee's  meetings,  and  prepare  the 
report  of  their  work  for  the  approval  of  the  board  of  directors. 
This  committee  is  useful  when  the  board  holds  its  meetings  at 
some  intervals,  and  loans  are  needing  attention  at  more  fre- 
quent times.  There  should  be,  in  addition,  a  sj^ecial  inspection 
of  building  loans,  as  the  work  progresses. 

Sec  20.  Auditin*?  Committee.  The  next  important. 
committee  to  be  appointed  by  the  president,  is  the  auditing  one 
It  should  act  at  least  once  a  year.  The  persons  selected  for 
this  position  should  be  expert  accountants,  without  any  rela- 
tionship to  the  officers  whose  books  are  to  be  placed  under 
examination.  While  the  report  of  the  auditors  \i lyrima  facie 
evidence  of  the  condition  of  the  books  of  the  officers,  yet  their 
accounts  may,  after  a  report  has  been  made,  be  impeached  for 
fraud.' 

Sec.  21.  Oflicers'  Bonds.  The  directors  should  re- 
quire, of  the  secretary  and  treasurer,  bonds  with  sufficient  sure- 
ties, conditioned  that  those  officers  will  faithfully  perform  the 
duties  required  of  them.  The  duty  of  approving  these  bonds 
is  upon  the  board  of  directors,  and  it  should  exercise  care  in 
a,ccepting  sureties.  The  board  should  exercise  care  in  this 
matter  to  avoid  personal  liability,  in  the  event  sureties  prove 
irresponsible.  It  does  not  follow  that  the  board,  in  law,  guar- 
antees the  responsibility  of  the  bondsman,  it  must  simply  be 
prudent.  This  is  the  obligation  the  law  imposes,  generally,  on 
the  members,  and,  when  they  have  performed  their  duties  in 
that  manner,  they  have  discharged  the  obligation. 

Sec.  23.  Sureties  on  Official  Bonds.  The  manner  of 
ascertaining  the  financial  responsibility  of  the  sureties  offered, 
is  either  by  an  examination  of  the  public  records,  or  by  a 
statement  of  the  sureties.     The  former  method  will  not  always 

•Holgate  V.  Shutt,  L.  R.,  27  Ch.  D. 
Ill;  S.  C,  L.  R.,  28  Ch.  D.  111. 


48  BUILDING    ASSOCIATIONS. 

produce  an  accurate  statement,  as  there  may  be  unrecorded 
and  valid  conveyances  or  liens  affecting  their  property.  If  the 
latter  method  is  adopted,  it  is  best  pursued  by  requiring  an 
affidavit,  by  each  surety,  as  to  what  he  is  worth. 

A  surety  is  not  discharged  by  the  negligence  of  other 
officers  of  the  association,  nor,  because  the  by-laws  are  not 
complied  with.*  If  the  officer's  holding  is  general  and  unlim- 
ited by  the  statute  or  by-laws,  the  fact  that  he  was  appointed  . 
by  directors  who  held  but  one  year,  will  not  limit  the  liability 
of  the  sureties  to  that  year,  but  it  will  continue  throughout 
the  term  of  the  officer's  actual  holding.'  And,  if  the  bond  is 
for  a  particular  and  "  any  succeeding  terms,"  the  bondsmen 
are  liable  for  a  subsequent  defalcation,'  but,  if  the  term  is  fixed, 
the  sureties  are  not  liable  beyond  that  term.*  The  surety  will 
be  bound,  although  he  signs,  in  the  absence,  and,  without  the 
knowledge,  of  the  principal.'  If  the  surety  has  had  an  oppor- 
tunity to  read  the  bond,  but  did  not,  and  signed  it,  he  is  guilty 
of  such  gross  negligence,  as  will  prevent  him  from  having  relief 
against  the  bond.'  The  bonds  of  the  officers  should  provide 
that  they  are  to  faithfully  perform  their  duties  during  the  par- 
ticular term,  and  until  successors  are  elected  and  qualified. 

Sec.   23.    llesigiiatiou    and    Removal   of  Direc- 
tors.    If  the  manner  of  electing  officers  is  prescribed  by  by- 
law, it  must  be  strictly  observed,^  unless  it  be  waived  by  the 
,  stockholders,  at  a  legal  meeting. 

A  director  may  resign  and  no  formal  acceptance  or  entry 
thereof  is  necessary  to  effect  his  resignation.'  The  stock- 
holders have  no  power  to  remove  directors,  before  the  expira- 
tion of  their  term  of  office,  unless  the  charter  expressly  gives 
that  power.'  Courts  have  no  power  to  remove  corporate 
officers.'"    The  directors  may  rescind  the  contract  of  an  agent 

'Brandt  Suretyship,  etc.,  sec.  425.  *Hnghes  v.  Littlefield,  18  Me.  400. 

'Humboldt,  etc.,  Society  v.  Wen-  'Glenn  v.  Statler,  42  Iowa,  107. 

nerhold,  81  Cal.  528.  'Roberts  v.  Price,  16  L.  J.  C.  P. 

'Metropolitan,  etc.,  Association  v.  169. 

Esche,  75  Cal.  513.  «Blake  v.  Wheeler,  18  Hun.  496. 

♦People's,     etc.,    Association    v.  'Cook  Stock,  etc.,  sec.  620. 

Wroth,  43  N.  J.'L.  TO.  "Neall  v.  HiU,  16  Cal.  145. 


officers'  relations  and  responsibilities.   49 

holding  at  the  pleasure  of  the  directors,'  and  he  may  be 
removed  for  incapacity  or  malfeasance,  when  he  is  under  con- 
tract; but  unless  these  things  exist,  they  cannot  remove  him 
during  his  contract,  or  term,  without  paying  the  amount  of  his 
salary.* 

As  the  decisions  are  somewhat  in  conflict,  as  to  the  power  of 
directors  to  remove  ofiicers,  the  by-laws  should,  to  avoid 
controversy,  provide  for  removals  from  office,  for  cause,  speci- 
fying the  mode  of  procedure. 

Sec.  24.  Officers*  Kelations  and  Responsibili- 
ties to  the  Association.  An  officer  of  a  building  asso- 
ciation holds  a  confidential  relation  to  it,  and  will  not  be  per- 
mitted to  take  advantage  of  any  knowledge  acquired  by  him 
by  virtue  of  his  position,  for  his  personal  benefit;  therefore, 
where  lie  knew  it  was  insolvent,  he  was  not  allowed  to  discharge 
his  indebtedness  to  it  with  stock  held  by  him.* 

He  must  treat  it  as  a  trust,  preserving  its  property  and 
advancing  its  interests  whenever  he  can.  The  funds  that  come 
into  his  hands  must  be  held,  like  life  insurance  funds,  with 
sacred  fidelity.  The  courts  will  not  tolerate  negligence  or 
omission. 

So,  if  the  secretary  or  treasurer  receives  money,  as  by  check, 
belonging  to  the  association,  and  appropriates  it  to  his  own 
use,  though,  probably,  with  the  intention  of  returning  the  money 
at  some  future  time,  he  is  guilty  of  embezzlement,"  and  he  will 
not  be  heard  to  say,  the  association  has  no  legal  existence.* 

'Hunter  v.  Sun,  etc.,  Company,  26  ^Quein  v.  Smith,  108  Pa.  St.  325. 

La.  Ann.  13.  *Shinn  V.  State,  32  Grat.  899. 

•Morawetz  Priv.  Corp.,  aec  544.  'lb. 


CHAPTER  VIL 


POWERS. 


Section  1.  General  powers. 

Section  2.  Implied  powers. 

Section  3.  Powers  of  Agents. 

Section  4.  Power  to  sue. 

Section  5.    Power   to    compro- 
mise with  shareholders. 


Section  6.    Power  to  loan  money 

Section  7.    Power  to  hold  real 

estate. 

Section  8.    Power  to  issue  stock 
to  another  corporation. 


Sec.  1.  General  Powers.  Generally  speaking,  a  build- 
ing association  has  the  usual  attributes  of  a  corporation,  such 
as,  perpetual  succession,  to  have  a  common  seal,  to  contract,  to 
hold  real  estate  consistent  with  its  objects,  to  sue  and  be  sued, 
to  make  by  laws ;  and,  in  addition  to  have  such  other  privileges 
as  may  be  conferred  by  the  incorporating  statute,  together 
with  such  incidental  powers  as  are  necessary  to  effect  the  cor- 
porate objects.  The  corporation  must,  therefore,  pursue  its 
legitimate  purposes,  for,  if  it  passes  beyond  the  scope  of  those 
purposes,  its  acts  amounts  to  a  mere  nullity.  A  transaction 
not  authorized  by  the  statute,  or  the  rules,  and  not  incidental  to 
the  conduct  of  the  society's  business  is  void.*  It  should  not 
engage  in  banking,'  or  invest  its  money  in  transactions,  or  secu- 
rities, unauthorized  by  the  statute,  and  not  contemplated  by  the 
scheme  of  its  organization.     In  some  instances,  the  law  will 


'Small  V.  Smith,  L.  R.,  10  App. 
Cas.  119. 

^Schobpr  V.  Accommodntion,  etc., 
Association,  35  Pa.  St.  223 ;  Build- 


ing Association  v.  Semiller,  35  Pa. 
St.  2i5n ;  State  v.  Building  Associa- 
tion, 35  Ohio  St.  253. 


(50) 


GENERAL    POWERS.  51 

not  permit  advantage  to  be  taken  of  tliose  ultra  vires  acts, 
because,  such  permission  will  promote,  rather  than  prevent, 
injustice.  If  the  association  exceeds  its  authority,  and  the 
stockholder  has  consented  to  such  act,  or,  has  reaped  a  benefit 
therefrom,  the  law  will  not  permit  him  to  say  the  association 
could  not  enforce  any  obligation  against  him  arising  out  of  the 
transaction,'  and  the  rule  applies  with  equal  force  to  the  asso- 
ciation, so  that  its  mouth  is  closed  to  deny  its  right  to  make  a 
contract  when  an  innocent  party  would  suffer  and  when  it  has 
received  a  benefit  from  the  contract.  These  instances  repre- 
sent cases,  where  the  law  will  not  enforce  the  consequences  of 
the  acts  exceeding  the  corporate  powers  of  the  association,  but, 
if  an  association  departs  from  the  authority  conferred  by 
statute,  and  assumes  new  or  enlarged  powers,  the  state,  as  the 
other  party  to  the  contract  of  corporate  existence,  would  have 
the  right  to  annul,  through  its  proper  ofScers,  that  contract 
represented  by  the  charter;  and  any  stockholder  not  a  benefi- 
ciarv  of  the  illegal  acts,  may  invoke  this  power  of  the  state  or 
apply  to  a  court  of  equity  to  restrain  their  farther  commission. 
And  the  mere  act, -wZ^r^  vires,  will  not,  of  itself ,  end  the  corpo- 
rate existence,  nor  relieve  the  members  from  their  duties,  so 
lonir  as  the  association  continues  in  existence." 

The  directors  to  intelligently  exercise  the  powers  of  the 
association,  must  have  an  understanding  of  its  scheme,  as 
expressed  in  the  statute  and  by-laws,  and  they  should  keep 
within  the  pale  of  its  corporate  objects  in  order  to  avoid  com- 
plicated and  uncertain  results  attending  a  contrary  course. 

The  association  continues,  uninterruptedly,  its  existence, 
notwithstanding  there  may  be  changes  in  officers  and  members, 
and,  thus,  it  has,  in  contradistinction  to  persons,  unchanged 
existence,  although  the  component  parts  may  change.  It  is, 
thus,  given  the  attribute  of  perpetual  succession  by  the  law. 
The  power  to  have  and  use  a  seal  is  a  corporate  function.  Its 
custody,  if  one  is  required  by  statute,  is  impliedly  with  the 
president,  and  the  affixing  is,  usually,  by  him,  but  the  by  laws 

'Poock  V.  Lafayette,    etc.,  Asso-  'Hughes  v.  Layton,  10  Jur.  N.  S- 

ciation,  71  Ind.  857.  513. 


52  BUILDING   ASSOCIATIONS. 

may  provide  for  other  custody  and  usage,  or  the  g;eneral 
powers  of  another  othcer  may  give  him  power  to  affix  the 
seal.  Ordinary  contracts  do  not  require  a  seal;  only  those 
require  a  corporate  seal  which  would  require  a  seal  if  they 
were  the  instruments  of  an  individual.  Any  device.will  serve 
as  seal  if  intended  as  such.* 

The  association  has  the  power  to  contract,  as  a  part  of  its 
corporate  existence.  It  is  invested  by  statute  with  unusul 
and  extraordinary  privileges  and  rights,  and,  with  reference 
to  those  powers,  any  contract  executed  by  it,  to  be  brought 
within  their  operation,  should  strictly  conform  to  the  very 
terms  of  the  law;' and  such  powers,  if  unauthorized  by  statute, 
but  contained  in  the  charter,  if  invoked  by  the  association,  will 
be  considered  inoperative,  even  when  the  attack  is  a  collateral 
one.' 

Sec.  2.  Implied  Po^vers.  Besides  these  -usual  powers, 
expressly  enumerated  in  the  statute,  there  are,  implied  powers 
as  may  be  necessary  to  carry  out  the  object  of  the  corporate 
existence.  The  defining  of  these  incidental  powers  is  some- 
times troublesome,  and,  especially  is  this  true,  in  regard  to 
building  associations  considered  as  a  peculiar  type  of  corpora- 
tions; therefore,  the  incorporating  statute  and  by  laws  should 
be  explicit  and  comprehensive  enough  to  meet  their  necessary 
requirements  as  savings  and  building  corporations. 

Sec.  3.  Powers  of  Agents.  The  association  exercises 
its  power  to 'contract  through  its  officers  and  agents,  including 
the  diiectors,  and  when  they  act  within  the  apparent  scope  of 
authority  conferred  on  them,  the  association  is  bound  by  their 
contracts.  It  becomes  important,  then,  that  all  limitations  on 
the  authority  of  an  agent  be  defined,  as  well  as  the  authority 
itself,  so  that  persons  dealing  with  the  association,  through 
him,  have  knowledo^e  thereof. 

If  the  agent  is  only  a  special  one,  the  person  dealing  with  him 
is  bound  to  take  notice  of  his  limited  powers,  and,  if  he  mani- 
festly exceeds  them,  the  association  is  not  bound;  while,  if  the 

'Imprint  in  red  lines  held  to  have  ''Birmingham  v.  Maryland,   etc., 

such  effect:  Woodman  v.  York,  etc.,      Association,  45  Lid-  54 1. 
R.  U.  Company,  50  Me.  549.  'Albright  v.  Building  Association, 

103  Pa.  St.  411. 


.POWER    TO    SUE.  53 

powers  are  general,  one  without  knowledge  of  any  limitation 
can  hold  the  association.  It  is  important  for  the  assocation 
to  define  clearly,  in  the  by  laws,  the  powers  of  its  officers, 
and,  in  case  of  special  agents,  to  draw  the  lines  of  authority 
strictly  to  the  objects  of  their  appointment.'  However,  if  the 
association  accept  and  hold  the  benefits  of  an  agent's  unauth- 
orized act,  it  will  be  considered  as  having  ratified  the  same, 
and  will  be  bound.' 

The  association  is  liable  to  third  parties  for  whatever  the  ao-ent 
does  or  says,  whatever  contracts,  rejjresentations,  or  admissions 
he  makes,  whatever  negligence  he  is  guilty  of,  and  whatever 
fraud  or  wrong  he  commits;  provided,  the  agent  acts  within  the 
scope  of  his  apparent  authority ,  and,  provided,  a  liability  would 
attach  to  the  principal,  if  he  was  in  the  place  of  the  ao-ent.' 

The  contracts  made  by  the  agent,  if  executed  in  the  name  of 
the  association,  and  on  its  behalf,  and,  it  appearino-  so  on  the 
face  of  the  instrument,  if  authorized,  will  bind  the  association. 
A  misnomer  of  the  association  in  a  contract  is  immaterial  if 
the  association  was  intended,  and  that  it  was,  may  be  shown,  if 
it  cannot  be  ascertained  from  the  face  of  the  contract.* 

Sec.  4.  Power  to  Sue.  The  association  may,  without 
any  allegation  as  to  incorporation,  other  than  a  mere  state- 
ment of  its  name,  sue  a  stockholder  or  other  person  or  corpo- 
ration,* unless  the  plea  oinul  tiel  corporation  is  filed.'     If  the 

'The  rule  is  that  ordinarily  an  ^Swell's  Evans  Agency,  p.  440. 
agent  cannot  delegate  the  power  en-  ''Franklin   Avenue,  etc,  Institu- 
trusted  to  him,  but  there  are  excep-  tion  v.  Board,  etc.,  75  Mo.  408. 
lions  as  he  may  do  so  when  it  is  the  ^Odd  Fellows,  etc..  Association  v. 
lawful  custom  or  usage,  or  the  act  Hogan,  28  Ark.  261 ;  Stein  v.  Indian- 
is  purely  ministerial,  or  where  the  apolis.  etc..  Association,  18  lad.  237. 
object  of  the  agency  cannot  lawfully  See  also  Chillicothe,  etc.,  Associa- 
be  attained  otherwise,  or  where  the  tion,60  Mo.218,where  it  was  held  that 
principalis  aware  that  his  agent  will  averment  that  an  association   was 
appoint  a  deputy.  See  Swell's  Evans  "duly    incorporated   under   and   by 
Agency,  p.  42.    An  appraiser  could  virtue  of  the  act  of  the  General  As- 
not  delegate  his  duty,   as  it  is  in  sembly  of  the  State  of  Missouri," 
nature  judicial,  while  the  secretary  was  sufficient, 
may,    as  it  is    merely  ministerial.  "Odd  Fellows,  etc.,  Association  v. 

*Jones  V.  National,  etc.,  Associa-  Hogan,  Supra, 
tion,  94  Pa.  St.   21.5;    Chicago,  etc., 
Society,  v.  Crowell,  65  111.  453. 


54  BUILDING    ASSOCIATIONS. 

action  is  upon  a  mortgage,  and  the  continuance  of  default,  fur 
a  specified  time,  is  a  condition  precedent  to  a  decree  of  fore- 
closure, such  continuance  should  be  averred.'  The  defendant 
member  may  tender  in  cash  the  amount  due  the  association 
and  it  is  bound  to  accept  it,  and,  if  it  refuses,  further  interest, 
premium,  and  costs  cannot  be  collected.  If  the  tender  is,  after 
suit  is  brought,  it  is  bound  to  accept  it,  or  be  liable  for  costs, 
and  it  will  be  unable  to,  thereafter,  collect  interest  and 
premium.'  The  refusal  by  the  association  of  a  tender  of  the 
amount  due  does  not  relieve  the  member  from  paying  his  dues, 
although  it  suspends  the  association's  right  to  collect  interest 
and  premium  until  it  is  accepted,  or,  if  it  rejects  the  tender, 
and  secures  a  decree  paying  the  costs,  of  course,  the  right  to 
collect  further  premium  and  interest  is  ended.  The  dues 
being  payments  on  the  stock  and  not  on  the  loan,  while  con- 
tinuous defaults  in  their  payment,  as  the  stock  is  pledged,  will 
render  the  loan  due,  yet  the  member  is  required,  even  upon 
refusal  of  the  tender,  to  continue  his  stock  payments,  for  that 
is  a  separate  liability  upon  which  the  association  could  if  it 
chose,  predicate  a  separate  action.  The  bringing  of  the  suit 
outside  of  the  question  of  tender,  does  not  relieve  the  member 
of  the  necessity  of  continuing  his  stipulated  payments  in  the 
way  of  dues,  premium,  and  interest,  or  suspend  his  liability  to 
.fines  for  delinquency  in  his  regular  payments.^  The  associa- 
tion represents  the  shareholders  in  defending  action  involving 

'Schaefer  v.  Amicable,  etc.,  Com-  Gaz.  388.  Generally,  the  legislativo 
pany,  47  Md.  126.  In  computing  the  intention  is  that  the  default  should 
period  fixed  by  the  statute  or  by-  be  for  a  continuous  period,  and  if 
laws  as  thft  limit  allowed  before  the  during  that  period  there  were  any 
whole  debt  becomes  due.partial  pay-  payments,  they  would  bo  applied 
ment  of  dues,  it  has  been  held  in  on  the  first  of  the  defaults,  thus  cut- 
Pennsylvania,  are  not  to  be  allowed,  tin;?  down  the  period  of  defaults  to 
For  instance,  whfn  the  period  of  six  that  extent. 

months  was  fixed  as  the  tim^^  of  de-  "Columbian,  etc.,  Association  v. 

fault,  before  the  association  could  Crumb,  42  Md.  193. 

proceed  on  its  mortgage,  it  was  held  ^German,  etc  .Association  v.  Metz- 

that  payment  of  part  of  January  ger,  9  W.  N.  C.  (Pa.)  201;    Unioa, 

dues  was  made,  this  did  not  make  etc..  Association  v.  Masonic    Hall, 

the  judgment  rendered  in  July  pre-  etc.,  Association,  a    Stew.  389. 
mature:     Barndt  v.  Gruel,  4  Leg. 


POWER    TO    LOAN    MONEY.  55 

their  rights,  and  a  judgment  against  it,  in  the  absence  of  fraud, 
binds  them.^ 

Sec.  5.  Power  to  Compromise  Avith  Sharehold- 
er. An  association  has  incidental  power  to  compromise  with 
shareholders  and  retire  stock  unless  prohibited  by  law.  The 
power  must  be  fairly  and  reasonably  exercised.'  It  may  com- 
promise with  him,  whether  the  debt  arose  from  loan  or  on  sub- 
scription for  stock,  and,  when  the  parties  to  the  transaction 
have  acted  in  good  faith,  the  transaction  will  not  be  rescinded, 
because  the  released  member  was  paid  a  greater  sum  than  he 
would  have  received  upon  a  pro  rata  distribution  of  the  assets 
of  the  association.'  The  association,  if  solvent,  may  appropriate 
and  apply  the  proceeds  of  a  mortgage  owing  to  itself  in  pay- 
ment of  a  debt  that  it  owes  to  a  withdrawing  stockholder.  The 
power  to  compromise  debts  includes   the  power  to  remit  fines. 

Sec.  6.  Power  to  Loan  Money.  The  power  of  the 
association  to  loan  money,  to  hold  real  estate,  and  the  rates  of 
interest  to  be  charged,  and  security  to  be  taken,  are  usually 
detined  by  the  creative  statute,  but,  in  the  absence  of  the 
statute  defining  the  security,  they  would  have  the  implied 
power  to  loan  money  on  the  same  security  as  individuals,  not- 
withstanding, the  usual  mode  is  to  require  the  borrower  to 
assign  liis  own  stock  as  collateral  to  his  mortgage.*  And, 
where  they  are  authorized  to  loan  money  but  not  expressly 
authorized  to  take  a  mortgage  or  any  other  security,  the  asso- 
ciation has  power  by  implication  to  take  a  mortgao-e  to 
secuie  repayment  to  it  of  the  funds  loaned  in  regular  course 
of  business.*  But,  if  authorized  to  invest  surplus  funds  in 
notes,  this  would  not  give  the  association  the  power  to  buy 
notes  to  sell  for  gain,  as  that  would  be  clearly  beyond  its 
scope.'  The  association  would,  however,  have  the  ri<>-ht  to 
sell  the  notes  to  change  its  investment.  The  power  to  buy 
implies,  to  that  extent,  the  power  to  sell. 

'Heggiev.  Buildin;^,  etc.,  Associa-  *Union,  etc.,   Association  v.  Ma- 

tion,  107  N.  C.  581.  sonic  Hall  Association,  2  Stew.  389. 

^Wangerien  v.  Aspehl,47  Ohio  St.  s^j^ssey  v.  Citizens,  etc.,  Associa- 

SiO.  tion,  22  Kan.  624. 

'lb;  State  V.   Building   Associa-  "Manufacturers',  etc.,  Company  v. 

ciation,  35  Ohio  St  258.  Conover,  5  Phila.   18. 


56  BUILDING    ASSOCIATIONS. 

Sec.  7.    Power  to  Hold  Real    Estate.     The  power 

to  hold  real  estate  is,  generally,  deMned  by  statute,  and  the  asso- 
ciation cannot  go  beyond  the  limits  there  fixed  without  incur- 
ring the  risk  of  doing  an  invalid  thing.  An  association,  with- 
out statutory  authority  for  holding  land,  might  be  compelled 
to  take  it  for  payment  of  a  debt,  and,  in  such  case,  the  trans- 
action would  not  be  annulled,  as  it  is  necessary  to  the  manage- 
ment of  its  business,^  but  the  duty  of  the  association  would  be 
to  dispose  of  it,  as  soon  as  practicable.  If  land  is  purchased  by 
•the  association  beyond  its  authority,  the  effect  is  rfot  to  dis- 
Bolve  the  association,'  but  the  court  will  declare  the  contract 
void,  unless  it  has  gone  into  the  hands  of  a  person  protected, 
by  law,  as  an  innocent  purchaser.'  If  the  transactions  still 
remains  between  the  original  parties,  they  are  left  by  the  law 
as  if  there  had  been  no  contract,  but  if  the  rights  of  an  inno- 
cent purchaser  have  intervened,  he  will  be  protected,  and  if  a 
loss  falls  upon  the  association,  a  personal  liability  therefor  may 
attach  to  its  officers  and  agents.* 

The  scheme  of  a  building  association  does  not  contemplate 
that  it  become  a  land  company,  engaged  in  buying,  selling,  or 
speculating,  in  land,  as  apart  of  its  business.  If  it  is  invested 
with  those  powers  by  statute,  then,  of  course,  it  can  lawfully 
avail  itself  of  them,  but,  unless  expressly  granted,  they  cannot 
be  exercised;"*  however  excepting  from  this  general  proposition 
involuntary  con's^yances,  such  as,  titles  invested  by  court 
decree,  or  compromise  of  debt,  which,  necessarily,  follow  in  the 
legitimate  line  of  its  business. 

Sec.  8.  Power  to,  Issue  Stock  to  Another  Cor- 
poration. Whether  or  not  a  building  association  has. the' 
right  to  issue  stock  to  another  corporation  and  advance  money 
thereon,  is  not  settled  by  the  courts.     In  England  it  has  been 

'Morawetz  Priv.  Corp.  sec.  327.  sonal    obligation,  Taut   a    purchase 

'Hughes  V.  Layton,  33  L.  J.  M.  C.  money    lien  will  be    restricted,   to 

89.  the  land  itself:  Faulliner's  Appeal, 

8Vos  V.Cedar  Grove,  etc.,  Asso-  IIW.  N.  C  ^8. 

elation.  9  Bull.  194.  ^MJHer's  Estate,  2  Pearson,  848; 

*Ia   Pennsylvania  it  is  held  that  Rhoads  v.  Hoernerstown,  etc,  As- 

the  curative    act  of  1878  -will   not  sociation,  83  Pa.  St.  180. 
validate  such  a  contract  as  a  per- 


ISSUING  STOCK  TO  ANOTHER    CORPORATION.       57 

held,  that  one  society  has  no  power  to  invest  its  funds  with 
another  society,'  and  it  was,  also,  held  that  the  society  had  no 
power  to  advance  money  to  a  joint  stock  company.'  A  corpo- 
ration cannot  hold  shares  in  another  company  as  an  invest- 
ment, unless  this  be  the  usual  method  of  carrying  on  its 
proper  business.*  The  statutes  in  some  of  the  states  provide 
generally,  that  no  corporation  shall  purchase  and  hold  stock  in 
another  corporation.  The  reason  of  this  is,  that  the  legisla- 
ture does  not  intend,  that  the  capital  of  a  company  shall  be  di- 
verted from  its  declared  purposes  by  investment  in  stock  of 
other  corporations.  In  building  associations,  the  reason  of  the 
rule  fails,  and,  therefore,  the  rule  will  not  apply  unless  the 
statute,  specilically,  prohibits  the  association  from  receiving 
other  corporations  into  membership.  The  issuing  of  stock  is' 
a  device  in  a  building  association  by  which  a  loan  is  made. 
The  stock  is  one  of  the  instruments  of  the  loan.  Onl}'  by 
holding  it,  unless  there  is  special  statutory  authority,  can  the 
loan  be  granted.  Stock  is  therefore  taken  for  that  purpose. 
If  the  other  corporation  has  power  to  borrow,  it  has  the  rio-ht 
tQ  do  those  things  needed  to  perfect  the  loan.  If  it  borrow 
from  a  building  association,  one  of  those  things  is  to  hold 
stock.  None  of  its  capital  is  thereby  withdrawn,  its  pay- 
ments on  the  stock  are  payments  practically  on  the  loan  and 
its  cost.  For  the  purpose  of  borrowing,  it  would  seem  upon 
sound  reasoning,  that  a  corporation  may,  lawfully,  take  shares. 
If  shares  are  taken  for  investment,  an  entirely  different  ques- 
tion is  presented,  and  the  reason  of  the  statute  would  apply, 
and  its  operation  would  be  invoked.  The  association  would 
then  have  no  power  to  issue  the  stock. 

'Iq  re  Durham  Co.,  etc,  Society,  ^Morawetz  Priv.  Corp.  sec.  431. 

25  L.  T.  Rep.  N.  S  8  5. 

*Hardy  v.  Metropolitan,  etc.,  Com- 
pany, L.  R.,  7  Ch.    App.  427. 


CHAPTER  Vin. 
EIGHTS  OF  MEMBERS. 


Section  1.  Legal  status  of  mem- 
bers. 

Section  2.    Preferential  stock. 

Section  3.    Paid  up  stock. 

Section  4.  Members  aud  offi- 
cers must  observe  rules. 

Section  5.  Members'  rights  to 
inspect  books. 

Section  6.  Member  as  an  in- 
vestor. 

Section  7.    Payments. 

Section  8.    Right  of  withdrawal. 

Section  9.  Manner  of  with- 
drawal. 

Section  10.  Legal  status  of 
withdrawing  member. 

Section  11.  Liability  of  with- 
drawing members. 

Section  12.  Rights  of  withdraw- 
ing members  of  insolvent  associa- 
tion. 

Section  13.  Right  to  withdraw 
limited  to  present  funds. 

Section  14.  Stock  pledged  can- 
not be  withdrawn. 


Section  15.    Amount  withdraw- 
able. 

Section  16.   Construction  of    by 
laws  concerning  withdrawals. 

Section  17.    Transfer  of  shares. 

Section  18.     Forfeitures. 

Section  19.    The  legal  status  of 
member  as  a  borrower. 

Section  20.  Duty  of  association 
to  loan  its  money. 

Section  21.    Selection    of   bor- 
rower. 

Section  22.     Methods    of   pre- 
mium charges. 

Section  23.    Auction  premiums. 

Section  24.    Premium  fixed,  un> 

changeable. 

Section  25.     Premium    charge- 
able to  maturity  only. 

Section  26.    Formal  application^ 
for  kian. 

Section  27.    Appraisement. 

Section  28.    Abstract  of  title. 


58 


LEGAL    STATUS    OF    MEMBERS. 


59 


Section  39.     Intert^at  not  collect- 
able on  interest  and  premium. 


Section  30. 
ments 

Section  31. 
or  bond. 

Section  33. 
gage. 

Section  33. 


Payment  of  instal- 


Provisions  of   note 


Provisions  of  mort- 


Complaint      upon 


bond  or  mortgage. 

Section  34.    Loans  to  outsiders. 

Section  35.    Loans   to   married 
women. 

Section  30.  Mortgage  covenants. 

Section  37.    Application  of  pay- 
ments. 

Section    38,      Assignment      of 
shares  as  collateral  security. 

Section  39.    Payments  on  stock 
not  to  ipso  facto  payments  on  loan. 

Section  40.    Payments  on  re-as- 
signed stock. 


Section  41.  Assigned  shares 
cannot  be  credited. 

Section  43.  Liability  of  borrow- 
er under  his  mortgage  for  losses. 

Section  43.  Acknowledgement 
of  mortgage. 

Section  44.  Leases  by  the  asso- 
ciation. 

Section  45.  Satisfaction  of  mort- 
gages. 

Section  46.  Borrower  entitled 
to  set  off. 

Section  47.  Amount  payable 
upon  foreclosure. 

Section  48.    The  English  rule. 

Section  49.  Rule  laid  down 
upon  voluntary  repayment. 

Section  50.  Uncertainty  of  the 
foregoing  rules. 

Section  51.  The  natural  and 
logical  rule. 

Section  53.  By  laws  should  pro- 
vide for  record  cancellations. 


Section  1.  Legal  Status  of  Member.  In  consider- 
ing the  lescal  status  of  a  member,  we  have  reo^arded  him  as 
occupjin^^  the  general  position  of  stockholder  in  a  corpora- 
tion, with  moditied  rights  and  liabilities  to  suit  the  peculiar 
nature  of  the  institution.  As  a  stockholder  he  is  either  an 
investor  or  a  borrower.  Every  member  of  the  association, 
from  the  moment  he  joins,  becomes  a  debtor  to  the  associ- 
ation, and  every  member  remains  a  debtor  until  the  full 
amount  of  the  shares  for  which  he  subscribed,  and  became  the 
holder  of,  is  paid,  unless  his  membership  is  terminated  in  a 
legal  manner.'  And  default  by  any  other  member  will  not 
relieve  him  from  his  liability.'  Being  iixed  as  a  debtor,  he 
remains  such  until  his  stock  is  matured,  unless  he  chooses  to 


'Michigan,    etc.,     Association    v. 
JIcDevitt,  77  Mich.  1. 


'Hoboken,      etc.,    Association  ▼. 
Martin,  3  Beas.,  N.  J.  427. 


60  BUILDING     ASSOCIATIONS. 

terminate  his  membership.  And  a  person  can  be  both  a 
shareholder  and  creditor  of  the  association;  as  shareholder  he 
is  liable  for  his  proportion  of  losses,  but  as  creditor,  he  is 
entitled  to  recover  the  amount  due  him,  independently  of  all 
losses.' 

Sec.  2.  Preferential  Stock.  The  building  associ- 
ation idea  implies  absolute  co-operation.  In  the  absence  of 
statutory  authority,  there  should  be  no  preferential  members. 
Common  strength  is  increased  strength,  and  by  the  plan  of 
depositing  in  one  treasury  the  savings  of  many  people  for  the 
common  benefit  of  all,  any  one  depositor  receives  benefits  not 
attainable  by  his  own  unaided  efforts.  It  is  a  part  of  the  scheme 
that  all  members  shall  share  equally  in  the  profits,  according  to 
their  stockholdings;  unless  the  statute  provides  otherwise,  the 
net  profits  should  attach  pro  rata  to  all  the  shares.  In  event 
of  dissolution,  the  assets  must  be  distributed  equally  among 
the  members,  subject,  of  course,  to  the  payment  of  debts,  and 
if  there  is  a  reserve  fund,  each  member  is  entitled  to  a  pro- 
rata share  upon  distribution,  whether  he  is  a  borrowing  mem- 
ber or  not.^"  If  the  directors  distribute  profits  in  any  other 
way  than  contemplated  by  law,  they  become  personally  liable 
to  an  injured  member. 

Sec.  3.  Paid-up  Stock.  In  England,  and  in  some  of 
the  States,  building  associations  are  permitted  under  restric- 
tions, to  issue  paid-up  stock;  i.  «.,  stock  where  the  full  face 
value  is  paid  up  at  the  time  of  issue,  or  has  matured  by  the 
periodical  payments  and  the  profits,  and  upon  this  stock  fixed 
interest  dividends  are  paid.'  The  issue  of  this  stock  depends 
upon  the  creative  statute.  If  it  is  authorized,  and  no  interest 
is  fixed  by  statute,  it  should  receive  only  a  limited    share   of 

'Henninghausen   v.     Fishor,    50  1.,  Pa.,  123.   When  the  constitution 

Md.  583.  provided  for  payment  to  a  non  bor- 

^People  V.  Lowe,  117  N.  Y.  175;  rower  specified  rates  of  interest  on 

Seibel  v.  Building   Association,  -IS  -withdrawals,  -without  including  the 

Ohio   St.   371.     A  by-law  giving  to  borrower;  held  the   borrower    -was 

•withdra-wing  stock  5  per  cent  inter-  entitled  to  the  same  rate  of  interest: 

est,  applies  to  borrowing  as  well  as  People's,  etc..  Association  v.  Furey, 

non-borrowing  stockholders:    Win-  20  Atl.  R   890. 

terer  v.  Building  Association,  44  L.  -Davis  Building  Society,  18. 


PAID    UP    STOCK.  61 

the  profits,  and  it  should  be  kept  in  a  safe  ratio  with  the 
assets.  The  only  motive  in  the  issue  of  this  stock  should  be 
to  acquire  money  to  meet  the  demands  of  proposing  borrow- 
ers. In  some  associations,  where  the  borrowers  are  numer- 
ous, directors  may  be  com])elled  to  go  into  bank,  and  get  a 
temporary  loan  to  satisfy  demands  that  exhaust  the  ordinary 
receipts.  They  may  have  to  do  this  in  order  to  remove  dis- 
satisfaction amona:  the  members.  In  associations  accumulatinor 
idle  money,  paid  up  stock  would  be  superfluous  and  it  should 
not  be  issued.  An  income  to  the  association  is  secured  by  this 
stock  from*  another  class  of  shareholders,  and  the  rules  should 
be  so  drawn  that  if  at  any  time  the  demand  from  borrowers  be 
light,  the  association  may  compel  a  withdrawal  by  paying  off 
the  stock  in  the  order  of  its  issue.  The  rule  is  a  safeguard  to 
the  association  and  entirely  just.  Paid  up  stock  should  not  be 
allowed  as  the  predominating  stock.  It  is  a  source  of  strength 
to  the  association  if  limited  by  the  demands  upon  the  associa- 
tion, but  its  unlimited  issue  might  prove  a  weakness.  Stock 
of  this  character  forms  an  exception  to  the  rule  of  equal  dis- 
tribution and  should  not  be  entitled  to  share  in  the  proHts  be- 
yond the  lixed  dividends.* 

'There  is  an  honest  diversity  of  ed  some  equitable  features,  testify 
opinion  among  building  association  to  its  value  as  the  present  act  of 
managers  as  to  the  propriety  of  an  Parliament  authorizing  its  issue  is 
association  issuing  paid  up  stock.  the  result  of  their  efforts. 
The  objection  urged  by  its  oppon-  In  the  early  history  of  building 
ents  is,  that  it  allows  capitalists  to  associations,  the  borrowing  demands 
invest  their  money  at  oppressive  in-  were  not  heavy.  The  members  will- 
terest  rates,  to  be  paid  by  the  poor  ingly  waited  their  turns  to  receive 
home-seekers.  This  objection  would  money,  and,  in  fact,  the  receipts 
be  forcible  when  an  association  often  exceeded  the  loans.  But  in 
placed  such  stock  on  the  same  foot-  present  day  associations  the  constant 
ing  so  far  as  profits  are  concerned,  pressure  of  borrowing  members 
as  other  stock,  and  paid  its  pro  rata  compels  elasticity  of  the  original 
part  in  cash.  But  its  issue  is  cer-  scheme.  When  the  association  is 
tainly  helpful  to  an  association  unable  to  supply  the  demands  from 
when  temporarily  in  need  of  money  its  ordinary  receipts,  it  must  either 
at  a  cost  not  exceeding  the  legal  satisfy  them  by  borrowing,  or  secur- 
rate  of  interest,  under  the  restric-  ing,  investing  mcmey  or  lo^e  an  op- 
tions given  in  the  text.  English  so-  portunity  to  secure  a  borrower  who 
cieties,  from  whom  we  have  borrow-  may  not  apply  when  the  money  ac- 


62 


BUILDING    ASSOCIATIONS. 


Seo.  4.  Members  and  Officers  Must  Observe 
Rules.  "When  a  person  becomes  a  member,  he  thereby 
obh'gates  himself  to  conform  to  the  laws  of  the  society.  He 
shonld  be  given  a  copy  of  all  by-laws  and  rules  in  force,  and 
that  is  notice  to  him  of  their  contents.  Thereafter  he  cannot 
excuse  himself  of  his  ignorance  of  the  regulations.  And  after 
acting  as  a  member  and  enjoying  the  benefits  of  the  association 
under  its  bylaws,  the  law  will  not  permit  him  to  question  the 
legality  of  its  by-laws.*  The  members  being  subject  to  the 
regulations  have  a  right  to  expect  and  compel  the  officers  of  the 
association  to  observe  the  regulations.  If  the  officers  fail  or 
refuse  to  carry  out  the  rules,  they  are  blameable  and  a  personal 
liability  may  attach  to  them.  So  if  the  officers  act  contrary  to 
the  rules  and  expend  the  money  of  the  society  in  an  unauthor- 
ized manner,  they  may  be  compelled  to  replace  the  money.' 

Sec.  5  Members'  Rig^hts  to  Inspect  Books.  Mem- 
bers are  entitled  to  inspect  the  books  of  the  association  for 
proper  purposes,  at  proper  times,  and  they  are  entitled  to  such 
inspection  though  their  only  object  is  to  ascertain  whether 
their  affairs  have  been  properly  conducted  by  the  directors  or 
managers.  The  right  exists,  although  its  exercise  may  be 
inconvenient  to  the  officers^. 

Sec.  6.  Member  as  Investor.  Although  the  original 
plan  of  a  building  association  contemplated  that  each  member 
should  ultimately  become  a  borrower  and  in  some  states  it  is 
still  made  obligatory  for  relief  therefrom  to  be  purchased,  by  a 
penalty,*  yet  a  member  is  to  be  regarded  as  an  investor.  He, 
thereby,  assumes    duties  and   acquires   rights  that  are  not 


cumulates.  If  this  relief  is  prohib- 
ited, premiums  naturally  go  exor- 
bitantly high,  and  the  borrower  is 
the  sufferer,  and  it  is  unlawful  to 
stifle  competition  in  bidding,  by  lim- 
iting the  premium.  See  sec.  23 
post.  So  by  letting  in  this  money 
under  safe  restrictions,  the  con- 
gested condition  of  the  associa- 
tion  is  relieved  without  injury  to 


any  member  and  with  great  benefit 
to  many. 

'Building  Association  v.  Arbeiter 
Bund,  6  Bull,  823 ;  Building  Associa- 
tion  V.  Minnick,  1  Kulp,  513 

^Grimes  v.  Harrison,  28  L.  J.  Ch. 
823. 

^Huylar  v.  Cragin,  etc.,  Company, 
40  N.  J.  Eq.  392. 

•*In  Maryland  this  is  required  by 
some  associations. 


PAYMENTS.  63 

removed,  though  modified  and  increased  by  the  fact  that  he 
becomes  a  borrower. 

When  a  person  becomes  a  member,  he  is  a  debtor  to  the 
association  until  his  stock  matures,*  and  suit  may  be  main- 
tained against  him  for  monthly  dues.^  Some  doubt  was 
expressed  in  England  as  to  whether  it  was  lawful  for  an  asso- 
ciation to  receive  money  from  members  who  did  not  wish  to 
lake  loans,  but  merely  wished  to  allow  their  monthly  pay- 
ments to  accumulate  at  compound  interest  until  the  dissolu- 
tion  of  the  association,  but  it  has  since  been  decided  to  be 
lawful.*  The  practice  is  general  throughout  the  United 
States,  to  provide  for  the  investing  class,  persons  who  never 
contemplate  borrowing,  but  who  deposit  their  surplus  in  the 
association  for  safety  and  profit.  The  rights  of  an  investor 
are  different  in  different  associations.  In  the  serial  and  per- 
manent associations  their  rights  are  unlike,  and  in  associations 
of  the  same  type  they  may  vary.  In  some  states,  paid  up 
and  deposit  shares  are  issued;  while,  in  other  states,  but 
one  kind  of  installment  stock  is  issued.  It  would  be  futile 
to  enter  into  an  investigation  of  the  different  rules  for  invest- 
ing: members  under  these  varied  conditions.  Their  rights 
acquired  in  such  societies  are  determinable  from  the  laws  and 
rules  of  each  particular  association  as  authorized  by  the  incor- 
porating statute. 

Sec.  7.  Payments.  Payments  of  money  by  the  mem- 
bers should  be  made  to  an  officer  authorized  to  receive  them;' 
otherwise  if  there  is  loss  the  association  is  not  bound  to  credit 
the  payment  in  favor  of  the  member.  If  the  by-laws  make  it 
the  duty  of  the  secretary  to  receive  money,  payment  at  his 
place  of  business  is  valid.' 

•Michisran,  etc.,  Association  v.  Mc-  cer  of  the  association  to  apply  to  a 

Devitt,  77  Mich.  1.  member  for  his  subscriptions  at  the 

^Association  v.  Kribs,  7   Leg.  &  proper  time  and  in  accordance  with 

Ins  Rep.  (Pa.)  21.  the  rules,  will  not  excuse  default  in 

^Davis  Building  Society,  264.  the  payment  by  the  member:  Tay- 

*Doe  d  Morrison  v.  Glover,  15  Q.  lor  v.  Collins,  46     L.  T.  Rep.  N.  S. 

B.     103.  16S. 

*Kilpatrick  V.  Association,  119  Pa.  *Schutte  v.  California,  etc.,  Asso- 

St.  30.    And  the  neglect  of  an  offi-  elation,  23  Atl.  Kep.  336. 


64  BUILDING     ASSOCIATIONS. 

Sec.  8.  Right  of  Withdrawal.  One  of  the  most  im- 
portant rights  conferred  upon  a  stockholder  is  the  right  of 
withdrawal.  This  right  is  incorporated  in  all  statutes.  A 
distino-uishing  difference  between  the  stockholder  of  a  build- 
ino-  association  and  the  stockholder  in  an  ordinary  private 
corporation  is  the  right  of  the  former  upon  giving  notice  to 
terminate  future  liability  on  his  stock.  He  can  arbitrarily 
divest  himself  of  his  membership,  cut  loose  from  the  associa- 
tion, and  end  his  duties  and  liabilities.  In  an  ordinary  cor- 
poration, a  subscriber  for  stock  cannot  obtain  a  cancellation  of 
his  subscription  except  by  the  unanimous  consent  of  the  other 
subscribers,  and  then  he  could  not  do  it  if  there  were  credit- 
ors whose  rights  would  be  jeopardized.  Even  a  majority  of 
the  stockholders  cannot  withdraw  and  refuse  to  proceed  fur- 
ther in  the  corporate  enterprise;  and  these  rules  are  said  to  be 
just  and  based  upon  a  sound  public  policy.'  The  liberality  of 
the  legislative  policy  can  be  readily  seen,  in  making  such  a 
radical  change  in  the  law  of  corporations  by  investing  the 
building  association  stockholder  with  the  personal  right  of 
withdrawal.  It  being  considered  in  other  corporations  highly 
essential  to  retain  the  stockholder,  it  would  seem  that  the 
legislature  never  intended  to  permit  a  full,  unconditional  with- 
drawal and  consequent  termination  of  all  liabilities.  Such 
important  modification  of  established  rules  must  necessarily^ 
even  in  a  building  association  be  attended  with  some  wise 
restrictions. 

Sec.  9.  Manner  of  Withdrawal.  The  by-laws  should 
prescribe  the  manner  of  withdrawal,  and  in  this  they  generally 
but  re-enact  the  statute,  as  it  usually  defines  the  right.  The 
withdrawing  member  should  be  required  to  give  a  written 
notice"  of   his  intention  to  withdraw.     That  notice  should  be 


»Cook  Stock,  etc.,  sec  169.  cess  as  the  trustee  of  a  member  at 

"The    written    notice    may     be  the  withdrawal  value  of  his  shares, 

waived  by  the  association  and  an  although  he  has  given  it  no  notice 

oral  notice   accepted:    McKenney  of    his    desire    to  withdraw    such 

V.  Diamond  State,  etc ,  Association,  shares:      Atwood   V.    Dumas,   14J> 

18    Atl.     K.   905.     A    co-operative  Mass.  167. 
bank  is  chargeable  in  a  trustee  pro- 


LEGAL  STATUS  OF  WITHDRAWING.       65 

served  npon  the  secretary  some  time  before  the  money  is  ex- 
pected, and  should  be  entered  by  hira  on  a  book  kept  for  that 
purpose.     The  amount  to  be  paid   upon  withdrawal  is  a  diffi- 
cult question,  unless  the  statute  determines  it,  since  the  enter- 
prise has  no  certain  prolits  until  It  is  wound  up,  as  there  may 
be  losses,  idle  money,  unforeseen  expenses  or  lower  premiums 
or  interest,  while  the  association  may  be  completely  successful 
and  yield  a  larger  return  than  calculated.     It  is  inequitable  to 
allow  him  to  take  out  all  the  profits  accruing  upon  his  shares, 
as  the  continuing  members  take'  all  the  burden  of  the  loans 
upon  which  the  retiring  stockholder  has  received  his  full  share 
of  profits.     The  association  should,  therefore,  retain  a  part  of 
the  profits.     The  withdrawal  value  should  be  adjusted  by  the 
directors  upon  the  time  of  the  membership.     If  the  member 
retires  early  in  the  life  of  the  association,  his  share  should  be 
small,  with  proper  increase  as  the  time  of  the  withdrawal  more 
nearly  approaches  maturity  of   stock.      In    ascertaining   the 
withdrawal  value,  another  element,  is  to  be  considered,  and 
that  is  the  earning  capacity  of  the  association.     An  arbitrary 
rule  might  be  unjust  in  some  societies,  as  approaching  too 
close  to  the  per  cent,  of  earnings.      A  general  rule  might, 
therefore,  be  unjust  when  applied.     If  one  coald  be  formu- 
lated it  would  be  to  repay  the  dues  paid  in,  less  expenses  and 
losses,  with  the  legal  rate  of  interest  for  the  average  time. 
This  rule  might  militate  against  the  association  in  early  with- 
drawals, but  it  w;ould  be  compensated  when  the  withdrawals 
were  late  and  left  a  large  surplus  profit. 

Sic.  10.  Legal  Status  of  Witlidrawingr  Member. 
When  a  member  gives  notice  of  withdrawal  he  stops  paying 
dues.  He  has  determined  that  he  will  no  longer  carry  hisi 
payments,  and  the  association  is  bound  by  that  determination. 
His  character  as  debtor  is  at  once  reversed,  and  he  becomes  a 
creditor  to  the  amount  of  his  legal  claim  and  is  entitled  to 
recover  as  such.'     But  he  is  not  entitled  to  recover  the  value 

'Builf]ing  Association  v.   Silver-  ation,  19  "W.  Va.  792.     See  Wittman 

man,  85  Pa.  St  394;  Building  Asso-  v.  Building  Association,  7  W.  N.  C. 

ciation'3   P:state,  12   W-  N.  C.  207;  80. 
Haigk  V.  United  States,  etc.,  Associ- 


66  BUILDING    ASSOCIATIONS. 

of  the  stock,'  nor  its  par  value  even  thons^h  it  has  matured,' 
but  only  the  withdrawal  value  as  fixed  by  the  by-laws  or  rules. 
A  complaint  to  recover  thereon  must  show  a  compliance  with 
the  by-laws  in  withdrawing,  and  that  payment  was  refused. 
And  he  cannot  enforce  his  demand  without  showing  funds  in 
the  treasury,  or  that  the  directors  consented  to  such  applica- 
tion.' The  authorities  are  somewhat  confusing  in  their  views 
of  him  as  he  stands  in  this  position.  Some  hold  him  as  a 
member;  others  divest  him  of  membership  and  qualify  him 
as  a  plain  creditor.  In  truth  he  has  the  attributes  of  both. 
As  ar^ainst  the  other  members  he  is  a  creditor  of  the  associa- 
tion; but  he  is  not  an  ordinary  creditor,  since  he  cannot  come 
in  competition  with  outside  creditors.  Their  claims  must  ba 
satisfied  before  his;  but  as  against  the  continuing  members  he 
is  entitled  to  be  paid  the  amount  due  him  before  they  can  di- 
vide  the  assets. 

Sec.  11.  Liability  of  Withdrawing  Member.  In 
the  sense  given  in  the  last  section,  the  withdrawing  member 
is  a  creditor,*  but  so  far  as  the  by-laws  and  rules  are  con- 
cerned, he  is  in  a  sense  a  member  until  payment'  and  he  is 
bound  by  them.  So  that  he  is  held  under  the  by-laws  for  all 
liability  incurred  prior  to  the  notice,  coming  to  the  knowledge 
of  the  society  after  the  notice  had  been  given.  But  lia- 
bilities incurred  after  the  notice  is  received  by  the  association 
cannot  be  imposed  upon  him.  While  he  continues  a  member 
and  subject  to  the  by-laws   for  some  purposes,  yet  he  is  not 

'Laurel  Run,  etc.,  Association  v.  is  liable  for  his  proportion  of  losses^ 

Sperring,  3  Kulp,  67.  but  as  creditor  he  is  entitled  to  re- 

"Building  Association  v.  Sperring,  cover  the  amount  due  him  indepen- 

106  Pa  St.  3i4.  dently  of  all  losses,  as  the  babinces 

'Texas,  etc..  Association  v.  Kerr,  assigned  by  ^vithdra-wing  members 

13  S.  W.  Rep.  1020.  must  be   presumed  to  have    been 

^See  also //ire  Blackburn,  etc., So-  ascertained,  after    allowing  all  de- 

ciety,  L.  R.  24  Ch.  D.  421;  Sibun  v.  ductions  to  which  the  withdrawing 

Pearce,  L.  R  ,  44  Ch.  D.  354;  Wright  mfmber,  assignors,  were  then  sub- 

V.  Deley  4  11.  &  C.  209.     In  Hen-  ject  or  liable. 

,    ningliausen,et  al.,v.  Tischer,50Md.  'Walker  v.  General  Mutual,  etc., 

583,  it  was  held  that  a  person  can  be  Society,  L.  R  ,  36  Ch.  Div.  777,  786; 

both  shareholder  and  a  creditor  of  Biburnv.  Pearce, L. R., 44 Ch.D. 35i 
the  corporation;  as  shareholder  he 


RIGHTS  OF  WITHDRAWING  MEMBERS.  67 

subject  to  dues  and  fines  after  notice  to  withdraw.  The  society 
retains  his  membership  until  he  is  paid,  for  readjusting  of  any 
liability  that  may  legally  attach  to  the  stock  before  the  actual 
retirement.  After  he  has  been  paid  off,  on  his  withdrawal,  and 
there  is  a  final  settlement  between  him  and  the  society,  in  the 
absence  of  mutual  mistake  or  fraud,  he  cannot  be  compelled 
to  make  good  a  deficiency  occurring  before  the  withdrawal 
and  discovered  before  the  winding  up  of  the  association'.  In 
order  to  remove  any  doubt  as  to  the  liability  of  withdrawing 
members  for  losses,  the  by-laws  should  explicitly  and  clearly 
define  it.  Where  a  by-law  provided  that  a  withdrawing  mem- 
ber was  "entitled  to  receive  the  amount  actually  paid  in  by 
him,  less  all  fines,  interest,  insurance,  due  from  him  with  aver- 
age interest  at  the  rate  of  6  per  cent  per  annum,"  the  court 
refused  to  allow  losses  because  they  did  not  come  under  any 
of  the  heads  mentioned  in  the  by-laws."  While  he  would  be 
equitably  chargeable  with  all  losses  incurred  prior  to  the  not- 
ice, the  amount  withdrawable  is  a  proper  subject  for  the  by- 
laws and  the  liability  for  such  losses  should  be  carefully  pro- 
vided for.  The  withdrawing  member  is  not  bound  by  new 
rules  made  after  he  has  given  notice  to  withdraw.'  He  may 
sell  and  assign  his  shares,  or  rather  his  claim,  and  the  pur- 
chaser takes  them  subject  to  all  liabilities,  just  fts  a  purchaser 
before  withdrawal  becomes  liable  to  the  duties  of  a  share- 
holder.* 

Sec.  13.  Rig^hts  of  Withdrawing'  ^leinbers  of 
Insolvent  Association.  While  a  withdrawing  member 
is  in  a  sense  described  a  creditor  of  the  association  and  can 
obtain  judgment,  yet  when  the  association  was  insolvent  at 
the  time  of  his  withdrawal,  he  cannot  compel  payment  of  the 
money  due  from  the  association  to  the  exclusion  of  claims  of 
general  creditors,  or  those  of  his  fellow  stockholders,*  for  if  the 

'/ti  re  West  Riding,  etc..  Society,         *Handley  v.  Farmer,  L'9  Beav.  362. 
L.  K.,  45  Ch.  Div.  463.  *Hanney  v.  Building  Association, 

*j\IcKennpy    v.    Diamond   State,      IG  W-  N.  C.  450. 
etc.,  Association,  18  Atl.  Bep.  90.1. 

'Armitage  v.  Wallier,  2  Jur.  N.  S. 
13. 


68  BUILDING  ASSOCIATIONS. 

society  is  known  to  be  insolvent  althonfrh  proceedings  may  not 
have  been  taken  to  wind  it  up,  the  withdrawing  rules  cannot 
be  invoked.'  But  the  association  cannot  withhold  a  part  of 
his  withdrawal  on  the  ground  of  apprehension  of  ultimate 
insolvency  of  the  association,  because  of  the  liability  of  the 
member  to  contribute,'  yet  he  cannot  withdraw  without 
considering  losses,^  though  they  are  probable,*  nor  necessary 
expenses.^  The  association  ordinarily  has  no  right  to  retire 
stock  before  the  terminating  period  and  force  out  the  stock 
holder  against  his  will,  so  long  as  he  performs  his  duties.' 

Sec.  13.  Kiglit  to  AVitlidraw  Limited  to  Present 
Funds.  The  right  of  members  to  presently  withdraw  depos- 
its, is  practically  limited  to  funds  on  hand.^  And  the  with- 
drawino'  member  must  show  that  there  are  funds  for  that 
purpose  before  he  can  enforce  his  demand,  but  it  is  an  abuse  of 
discretion  for  the  directors  to  so  invest  the  entire  funds  in  real 
estate  so  as  to  leave  none  applicable  to  the  payment  of  with- 
drawing members,  and  thus  defeat  their  rights.*  When  notice 
of  withdrawal  is  given  the  association,  it  should  arrange 
the  disposition  of  its  receipts  so  as  to  meet  its  pay- 
ments when  due.  "While  the  right  to  withdraw  is  only  grant- 
able  out  of  fund-s  designated  for  that  purpose,  it  is  not  intended 
that  ri<>-htful  lack  of  funds  shall  defeat  the  right  as  against  the 
members.  So,  if  the  association  is  solvent  and  a  member  gives 
notice  of  withdrawal,  and  the  notice  had  matured-  before  the 
association  is  being  wound  up,  he  is  entitled  to  be  paid  out  of 
the  assets,  after  outside  creditors,  in  priority  to  those  mem- 
bers who  had  not  given  notice,  notwithstanding  the  fact  that 

'/n  re  Sunderland,  etc.,  Society,  24  *McGrath  v.  Hamilton,  etc.,  Asso- 

Q  33   uiv  394.  ciation,  44  Pa.  St.  .383. 

''Junskuntz  v.  Building  Associa-  ^Ber'^man  v.  St.  Paul,  etc.,  Asso- 

tion,  G  Bull.  428.  tiation,  29  Minn.  275. 

sFriel  V.  Association,  1  Leg.  Rec.  'State  v  Redwood  Falls,  etc  Asso- 

Rep.  (Pa.)  217-  ciation,  45  Minn.  154. 

^Knoblanck  v.  Building  Associa-  ^National,    etc,     Association    v. 

tion,  25  P.  L.  .J.  89 ;  PatJert  v.  Build-  Hubley,  34  Leg.  Int.  6. 
ing   Association,    25   P.    L.  J.  40 
The  probable    loss  may  be  ascer- 
tained by  an  appraisement. 


I 


TRANSFER  OF  SHAREb.  69 

after  he  had  given  the  notice,  there  were  no  funds  for  pay- 
ment,' The  intention  of  the  rule  is  to  prevent  the  application 
of  the  funds  to  withdrawals  to  such  an  extent  that  its  operations 
will  be  crippled;  and  when  it  winds  up,  the  reason  of  the  rule 
does  not  apply,  which  readily  defeats  the  application  of  the 
rule  itself. 

Sec.  14.  Stock  Pledged  Cannot  be  Withdrawn. 
When  a  loan  is  made  to  the  member  his  stock  is  pledged  as 
collateral  security.  The  right  to  withdraw  is  thereby  curtailed 
to  the  extent  that  he  pay  off  his  loan  before  he  can  with- 
draw.' 

Sec.  15.  Amonnt  Withdrawable.  The  withdrawal 
by  the  member  includes  only  his  credits  on  his  stock.  So,  under 
an  ordinary  by-law  for  withdrawals,  he  is  not  entitled  to  have 
premium,  interest,  lines,  transfer  fees  or  charges  of  that  char- 
acter refunded  to  him.* 

Sec.  16.  Construction  of  By-Laws  Concerning 
Withdrawal.  Tiie  by-laws  providing  for  withdrawal,  are 
favoral)ly  construed  for  the  member,  but  any  privileges  therein 
given,  if  not  taken  advantage  of  by  the  member  as  therein 
specihed,  are  forfeited."  And  if  the  by-laws  provide  that  no 
money  is  to  be  paid  on  a  withdrawal  unless  the  pass  book  is 
produced,  its  production  is  a  condition  precedent  to  pay- 
ment.' 

Sec.  17.  Transfer  of  Shares.  The  by-laws  should  pro- 
vide for  transferring  of  stock  by  a  shareholder.  The  certificate 
of  stock  should  have  a  blank  assignment  indorsed  on  it,  to  be 
acknowledged  before  the  secretary,  or  a  power  of  attorney  to 
the  transferee  to  make  the  transfer,  and  the  by-laws  usually 
provide  that  upon  payment  of  a  transfer  fee,  the  secretary  shall 

'Walton  V.  Edffe,  L.  R.  10  App.  ^Socurity,    etc.,     Association    v. 

Cds.  ;i3;  lire  J\Iid(llesbroui,^h,  etc.,  Lake,  00  Ala.  45  (i. 

Society.    53  L.  T  N.  S.  203;    In  re  ^Fuller  v.  Salem,  etc.,  Association, 

Blackburn,  etc..   Society,   L.  R ,  24  10  Gray  94;  Booz's  Appeal,  109  Pa. 

Ch.  Uiv  4'?1 ;  In  re  Mutual  Society,  St  592. 

24  ('h  D.  42.i.  'Atkinson  v.  Bradford,  etc.,    8o- 

*Building  Association  v.  Sperring,  ciety,  L.  li.,  25  Q.  B.  Div.  3?7. 
106  Pa.  St.  334;    State  v.  Red  Falls, 
etc.,  Association,  45  Minn.  154. 


70 


BUILDING  ASSOCIATIONS. 


enter  the  transfer  upon  the  books  of  the  association.*  The 
title  will  pass  by  an  assignment  of  stock,  without  transfer  on 
the  books  of  the  association,  but  until  the  transfer  is  so  entered 
the  transferrer  as  against  the  association,  and  creditors  of  the 
association,  is  liable  on  the  stock.'  The  association,  with 
knowledge  of  the  assignment,  may  choose  to  accept  the  trans- 
ferree  as  a  member,  but  the  legal  liability  to  do  so,  does  not 
attach  until  there  has  been  a  transfer  on  the  books.  The  offi- 
cers of  an  association  are  not  liable  where  they  divided  the 
assets  among  those  whom  the  books  show  to  be  stockholders, 
to  one  whose  name  does  not  appear  on  such  books,  but  who 
held  certificates  assigned  to  him  with  power  of  attorney  to 
transfer.'  However,  the  directors  should  not,  as  a  matter  of 
precaution  retire  any  stock  without  the  certificates  being  sur- 
rendered to  the  association,  but  in  declaring  dividends,  they 
would  be  justified  in  giving  them  to  the  stockholders  shown 
by  the  books.  A  transfer  of  stock  properly  effected,  will  not 
relieve  from  accrued  liability,  but  only  from  future  liability. 
A  by-law  that  no  stockholder  shall  be  permitted  to  transfer 
his  stock  while  he  is  in  default,  is  valid.*  A  building  associa- 
tion's rule  that  each  member  on  transferring  his  shares  to 
another  shall  pay  to  the  association  a  transfer  fee  on  each 
share,  has  no  application  where  one  who  has  subscribed  to  a 
number  of  shares  in  his  own  and  others'  names,  and  seeking  to 
exercise  his  right  of  withdrawal  on  all,  produces  proper  vouchers 
from  such  others  for  payment.*  When  the  association  refuses 
to  transfer  shares,  the  general  weight  of  authority  is  that 
mandamus  will  not  lie  to  compel  its  transfer,  and  that  the 
proper  action  is  for  damages." 


'The  transfer  fee  is  enforceable : 
McGannoa  v  Central,  etc.,  Associa- 
tion, 19  W.  Va.  726. 

'Cook  Stock,  etc.,  260. 

•Bank  of  Commerce's  Appeal,  73 
Pa.  St.  59  In  a  case  where  the  reg- 
istered holder  of  shares  held  in  trust 
for  plaintifl:  who  held  the  certifi- 
cates and  such  trustee  was  allowed 
to  withdraw  the  shares  without  pro- 
'ducing  the  certificates,  it  was  held 


the  society  was  not  liable  to  transfer 
the  shares  to  plaintiff:  Nolloth  v. 
Simplified,  etc.  Society,  58  L.  T.  N.3. 
859. 

•'Cunningham  v.    Alabama,  etc, 
Company,  4  Ala.  65'i. 

^Building  Association  v.  Hender- 
son, 3  Bull.  3S6. 

«GalbrHith  v.  Bldg.  Ass'n,  43N.  J. 
Law,  3S9 ;  Cook,  Stock,  etc.,  sec.  289. 


THE  LEGAL  STATUS  OF  MEMBER.  71 

Sec.  18.  Forfeitures.  Almost  all  associations  provide  that 
in  case  of  a  certain  number  of  defaults  in  his  payments,  the  mem- 
ber shall  forfeit  his  membership.  The  right  of  an  association 
to  declare  a  forfeiture  of  stock  for  non-payment  of  dues,  etc., 
must  be  clearly  authorized  by  the  charter  or  general  incor- 
poration laws;'  it  cannot  be  created  by  by-law.'  A  power  of 
this  character  must  be  constructed  strictly,  and  the  validity  of 
the  forfeiture  depends  upon  a  strict  compliance  with  the  law.' 
Forfeitures  are  not  favored  in  law,  and  the  right  must  be  ex- 
pressly conferred  and  exercised  in  accordance  with  the  granted 
power.  But  if  the  forfeiture  is  authorized,  the  courts  will  not 
relieve  a  member  for  a  willful  neglect  of  his  duties,*  and  he 
cannot  recover  back  the  money  paid  on  his  stock  after  it  has 
been  forfeited  for  non-payment  of  dues,  and  assessments, 
where  such  forfeiture  is  authorized  by  the  charter  of  the 
association.*  No  notice,  unless  there  is  one  prescribed  by  the 
charter  or  by-laws,  is  necessary'  before  declaring  the  forfeiture." 

When  the  association  holding  the  bond  of  a  member  forfeits 
his  membership  and  proceeds  upon  the  bond,  it  can  only 
recover  the  amount  actually  advanced  with  interest,  deducting 
payments.'^  The  association  having  declared  the  borrower  no 
longer  a  member,  can  only  enforce  against  him  as  though  he 
were  a  stranger. 

The  most' equitable  plan  in  case  of  default,  after  the  imposi- 
tion of  tines  becomes  ineffective,  is  to  provide,  after  a  certain 
time  upon  failure  to  pay  all  back  charges,  for  a  compulsorj 
withdrawal,  deducting  such  charges. 

Sec.  10.  The  Legal  St  at  vis  of  Member  as  a  Bor- 
rower.    When  the  association  has  accumulated  funds  suffi- 

'Cook  Stock,  sec.  123;  Perrin  v.  *Freemanv.  Ottawa,  etc.,  Associa 

Granger,  30  Vt.  595 ;  Henderson,  etc.  tion,  114  111.  183. 

AssociMtion  v.  Johnson,  10  S.  W.  "Holmes  v.  Smythe,  100  Dl.  413; 

Rep.  787.  Freeman  v.  Ottawa,  etc., Association, 

'Master  Stevedores' Assnv  "Walsh,  114  111.  182. 

2Daly,  14 ;  Rosenback  v  Salt  Sprinsjs,  'Ibid 

etc.,  Bank,  53  Barb  506 ;  In  re  Long  'Bechtold  v.  Brehm.  26  Pa  St.  269 ; 

Island,  etc.,  Company,  19  Wend.  37.  Denny  v.  We.st   Philadelphia,  etc., 

^Germantown,  etc,  Company    v.  Association,   39  lb-  154;   Premium 

Filler,  60  Pa.  St.  124.  Fund  Aasociation's  Appeal,  lb.  156. 


72 


BUILDING  ASSOCIATIONS. 


cient  to  loan,  a  member  under  its  rules  may  become  a 
borrower.  Upon  receiving  a  loan,  the  member  has  increased 
obligations.  In  order  that  the  rights  and  duties  of  the 
borrower  may  be  understood,  his  legal  status  should  be  defined. 
The  borrower  is  sometimes  called  an  advanced,  prepaid  or 
redeemed  shareholder.  It  matters  little  by  what  name  he  is 
known  so  long  as  it  is  kept  in  mind  that  his  act  of  borrowing 
money  does  not  in  law  divest  him  of  membership.  By  bor- 
rowing, he  takes  advantage  of  a  right  as  a  member  which  is 
vouchsafed  to  him  by  the  statute.  The  right  to  borrow  is 
inseparately  connected  with  his  membership;  it  flows  naturally 
from  that  endowment.  To  say  that  he  loses  his  membership 
upon  becoming  a  borrower  is  to  assert  that  the  assumption  of 
a  right  effectually  destroys  its  source.  And  it  is  equally 
untenable  to  say  that  his  status  as  a  member  is  modified  by 
borrowing.  When  a  member  bids  for  an  advance  on  his  shares, 
he  asks  for  a  loan.  Stripping  the  transaction  of  all  devices  as 
"advance  on"  or  "redemption  of"  shares,  it  is  the  act  of  the 
association  lending  to  its  member  a  sum  of  money  to  secure 
the  repayment  of  which  the  member  gives  a  mortgage  and 
assigns  his  stock  as  collateral  security.  What  change  is 
effected  in  the  member's  condition?  He  is  to  pay  dues;  that 
he  is  already  bound  to  do;  he  is  to  pay  premium  and  interest 
which  represent  the  cost  of  the  loan.  So  the  borrower  has  not 
modified  his  contract,  as  a  member,  but  he  has  added  ta  it  the 
cost- of  a  right  he  has  chosen  to  exercise,  and  has  secured  the 
repayment  of  the  money  gotten  by  the  exercise  of  that  right. 
He  has  not  surrendered  his  interest  in  the  society's  assets; 
neither  has  he  parted  title  with  his  stock;  he  has  pledged  it 
with  the  full  right  reserved  to  redeem  it  at  any  time.  The  bor- 
rower's interest  in  the  assets  of  the  society  are  unmodified 
but  it  is  burdened  with  the  pledge.  His  substantive  rights, 
as  a  member,  remain  unchanged,  except,  he  has  agreed  not  to 
exercise  his  right  of  withdrawal  as  long  as  the  loan  is  unpaid. 
His  stock  matures  as  the  stock  of  the  non-borrowers,  "and  he 
shares  in  losses  and  expenses.  Regarding  the  borrower  as 
such,  in  legal  effect,  simplifies  his  position  and  enables  us  to 
clearly  understand  it.     So  when  his  stock  has  matured,  the 


THE  LEGAL  STATUS  OF  MEMBER. 


73 


debt  or  the  loan  is  still  due  the  association  in  the  full  amount, 
but  if  he  chooses,  or  the  association  elects,  the  stock  may  be 
used  to  cancel  the  debt.  Until  that  application  has  been  made, 
his  debt  is  entirely  unpaid  and  he  remains  the  owner  of  the 
stock  with  the  lien  upon  it.  But  he  can  compel  the  association 
in  equity,'  if  not  by  the  rules,  to  resort  to  that  lien  and  exhaust 
his  stock,  representing  his  interest  in  the  distributive  assets 
of  the  association,  before  reaching  the  security  given  by  him, 
as,  if  it  satisfied  the  debt,  the  association  must  then  release  the 
mortgage.'  This  is  the  legal  status  of  the  member  who 
secures  the  face  value  of  his  shares  from  the  association  in 
advance  of  their  maturity.^ 


'Red  Bank,  etc  ,  Association,  v. 
Patterson,  27  N.  J.  Eq.  ?23. 

'Tyrrell,  etc., Association  v.  Haley, 
139  Ha.  St.  657. 

"Tlie  writer  is  aware  that  this 
view  is  not  in  accord  with  all  the 
courts.  In  Virginia  it  is  held  that 
borrowing  extinguishes  the  mem- 
bersliip.  and,  coosequentiy,  the  bor- 
rower is  not  entitled  to  participate 
in  the  final  division  of  the  funds: 
White  V.  Mechanics,  etc  ,  AsstKua- 
tion,  22  Grat.  233;  Winchester,  etc, 
Association  v.  Gilbert,  23  Grat.  787. 
But  he  is  yet  held  by  the  court 
to  his  covenants  as  a  party  to  the 
articles  of  association,  and  to  make 
his  regular  monthly  payment  of 
dues  and  tines,  obligations  secured 
by  his  mortgage.  As  has  been  said: 
"Observe  th»j  inconsistency;  he  has 
lost  his  membership  but  is  bound 
as  a  mt  mber  to  the  duties  of  mem- 
bership, and  has  even  put  himself 
under  bonds  to  be  a  good  member.'' 
Eadlich  Building  Associations,  p. 
18.J.  Ttie  better  rule  sustained  by 
the  courts  is  to  regard  the  advance 
as  a  loan:  Pfeister  v.  Wheeling, 
etc..  Association,  19  W.  Va.  C76; 
Mills  V  Sali>bury,  etc,  Association, 
75  N.  C  292;  Lincoln,  etc..  Associa- 
tion v.  Benjamin,  7  Neb.  181;  Mar- 


tin V.  Nashville,  etc.,  Association,  3 
Cold.  418;  Gordon  v.  Winchester, 
etc..  Association,  12  Bush  110; 
Securit}',  etc.  Association  v.  Lake, 
09  Ala  456.  In  a  Maryland  case  it 
is  held  that  advanced  or  prepaid 
members  are  obliged  to  pay  inter- 
est on  the  sum  advanced  besides 
their  weekly  dues — they  have  not 
ceased  to  be  members  by  the  pre- 
payments, but  continue  to  hold  an 
interest  in  the  management  and 
success  of  the  association,  as  upon 
thatdependstheir  earliest  relief,  not 
only  from  the  payment  of  the 
weekly  dues,  but  their  final  release 
from  their  mortgage.  Tlie  unpaid 
memtiers  are  not  absolved  from  the 
punctual  payment  of  weeklj'  dues. 
They  are  entitled  to  any  residium 
of  profits,  the  exclusive  interest  in 
which  has  been  devolved  upon 
them  by  virtue  of  the  contract, 
Willi  the  prepaid  members,  through 
the  act  of  the  coinpan}'^  lurnishing 
the  equivalent  consideration.  Both 
are  interested  and  under  mutual  ob- 
ligation to  contribute  to  the  accu- 
mulation of  the  common  fund  by  the 
payment  of  their  weekly  dues,  until 
the  time  provided  for  iis  final  distri- 
butii  m  and  settlement :  Lister  v.  Log 
Cabin,  etc.,  Association,  38  Md.  120. 


74  BUILDING  ASSOCIATIONS. 

The  member  as  a  borrower  is  still  a  member  with  all  his 
rif^hts,  except  as  pledged.  He  may  vote,'  hold  office,  transfer 
his  shares  subject  to  the  lien,  and  in  fact  do  everything  an- 
other shareholder  may  do. 

Sec.  20.  Duty  of  Association  to  Loan  its  Money. 
When  the  association  accumulates  the  amount  of  a  share  it 
then  becomes  its  duty  to  loan  it,  and  not  only  is  it  a  duty  to 
the  state  that  created  it  for  the  purpose  of  lending  to 
its  members,  but  it  is  a  duty  to  the  members,  as  through 
the  earning  power  of  its  accumulations  does  the  association 
expect  to  realize  the  profit  which  is  to  assist  in  maturing 
its  stock. 

Sec.  21.  Selection  of  Borrower.  The  next  step 
is  to  select  a  borrower  among  its  members."  The  most 
equitable  way  to  make  this  selection,  as  determined  by 
experience,  is  by  providing  for  bidding  among  the  mem- 
bers for  preference  of  the  loan.  The  method,  is  usually, 
to  offer  a  sum  upon  the  auction  plan,  and  the  highest 
bidder  pays  whatever  amount  he  feels  justified  in  pay- 
ing for  the  privilege  of  getting  the  money.  This  he 
pays  in  addition  to  interest.  Evenings  are  most  conven- 
ient to  the  shareholders  for  the  sales  of  money,  who  are 
generally  employed  during  the  day.  The  president  of 
the  association  is  the  officer  who  acts  as  auctioneer,  but 
any  officer  present  may  do  so.  Upon  a  bid  being,  received 
which  is  the  highest,  the  secretary  takes  a  memorandum  of 
it  with  the  name  of  the  bidder;  additional  sums,  if  any 
are  offered,  in  the  same  manner.  The  by  laws  should  provide 
for  a  penalty  in  a  small  amount  for  failure  to  take  a  loan  after 
bidding  it  in.  These  sales  should  be  conducted  upon  fair 
principles;    by-bidding,  especially  from  a  director,  should  not 


'In  Michigan, by  statute  the  ri,£;lit  «In  some  states  associations  are 

to  vote  is  withheld,  although  he  re-  permitted  to  make  Joans  outside  of 
mains  otherwise  a  member:  Mich-  their  membership,  but  from  the  na- 
igan,  etc.  Association  v.  McDevitt,  ture  of  the  scheme,  all  borrowing 
77  Mich.  1.  memb-Ts  should  be  satisfied  before 

loans  are  made  to  other  persons. 


METHODS  Of  PREMIUM  CHARGES.  75 

be  tolerated.  If  the  member  feels  such  tmfairness  is  being 
practiced  upon  him,  he  can  injure  the  society  before  its  mem- 
bers and  outsiders. 

Sec.  22.  Methods  of  Preinium  Cliarg^es.  The  pref- 
erence so  paid  is  called  (generally  the  premium,  and  the  man- 
ner of  its  payment  varies  in  different  associations. 

The  manner  of  chai-ging  premiums  has  been  measurably 
changed  since  the  earlier  societies.  Tlie  old  plan  of  de- 
ducting the  full  amount  of  premium  at  the  time  of  making 
the  loan  was  the  prevailing  method  at  one  time,  and  ia 
still  practiced  in  some  localities.  For  instance  if  a  bor- 
rower paid  25  per  cent,  on  a  $2,000  loan,  he  received  $1,500 
in  cash  and  paid  full  interest  on  the  $2,000.'  In  some  states 
this  method  was  invalidated  as  usurious,  while  in  others  it  was 
upheld.  These  associations,  to  prevent  inequality  in  the  cost 
of  money,  adopted  the  minimum  premium  plan,  requiring  all 
bidders  to  pay  at  least  a  certain  premium.  When  the  bor- 
rower desired  to  repay  his  loan  the  face  value  was  not  re- 
quired, i.  e.  from  the  $2,000  he  was  allowed  a  rebate  of  pre- 
mium having  reference  to  the  unexpired  time.  The  system 
has  generally  been  found  so  complex  in  the  keeping  of  its  ac- 
counts and  so  uncertain  in  its  earnings  that  it  has  been  modi- 
lied  in  many  states,  and  entirely  superseded  in  others.'  One 
modification  of  this  plan  was  to  give  the  borrower  the  face  of 
the  loan,  less  his  bid,  and  to  charge  interest  on  the  net  loan 
only.  It  involved  the  same  intricacies  as  the  other  plan,  and 
has  not  been  generally  adopted.  The  most  popular  system 
throughout  the  United  States  is  that  by  which  the  borrower 
pays  with  his  installments  his  interest  and  premium.  If  the 
borrower  desires  to  repay  his  loan,  he  only  pays  premium  up  to 
the  time  of  repaying  his  loan.     This  system  is  simple  to  the 

^It  has  been  recently  held  that  etc.,  Association  v.  Tascott,  28  N.  E. 

in  an  association  operating  under  Rep.  (Ill)  801;  Affirming  Tascott  v 

this  plan,  a  stockholder  who  had  Mutual,    etc.,    Association,    37   111. 

bid  25  per  cent  premium  for  a  loan  App  274. 

of  $100  was  entitled  to  receive  .$80,  ''The  statute  of  Indiana  in  force 

since  the  per  centage  of  the  pre-  contemplates  this  style  of  an  asso- 

mium  is  to  be  computed  on  the  act-  ciation,butthey  are  not  received  with 

ual  sum.  received  by  him :    Mutual,  as  much  favor  as  the  newer  plans. 


76 


BUILDING  ASSOCIATIONS. 


borrower,  which  is  a  strong  point,  and  it  lays  a  less  heavy  bur- 
den on  him,  lessening  the  amount  of  the  premium  and  making 
its  payment  easy.  In  T^ew  York,  the  premium  is  charged  aa 
a  bonus,  is  so  understood  by  the  borrower,  and  is  then  deducted 
from  the  loan.  He  gives  security  for  the  face  of  the  loan  and 
pays  interest  on  that.  The  premium  is  settled;  there  are  no 
rebates,  and  with  this  understanding  the  borrower  governs  his 
bidding,  and  there  is  a  consequent  tendency  to  lower  the  bids. 
The  merit  of  the  plan  is  in  impressing  upon  the  borrower  that 
the  premium  is  a  bonus  for  the  preference  in  the  use  of 
money.  That  is  the  true  function  of  premiums.  Primarily, 
the  association  uses  the  method  of  charging  premiums  to  make 
an  equitable  selection  of  a  borrower;  and  secondarily,  to  make 
aprotit;  but  premiums  should  be  bid  by  borrowers  on  the 
theory  that  they  are  paying  that  much  for  the  right  to  have 
the  money  over  fellow  stockholders.  There  are  many  differ- 
ent schemes  for  charging  premiums  indigenous  to  different 
localities,  but  those  outlined  are  the  general  ones.^  To  an  un- 
informed mind,  this  additiorial  cost  of  money,  in  the  charge  of 
premiums,  seems  an  exorbitant  cost,  but  in  view  of  the  profit 
attaching  to  the  borrower's  stock  with  which  he  can  pay  the 
debt,  the  apparent  cost  is  materially  reduced  and  it  is  not  op- 
pressive. In  charging  premiums  the  association  should  be 
guided  by  the  statute.  If  the  premium  charge  is  not  author- 
ized by  the  statute,  and  it  increases  the  cost  of  the  loan  be- 
yond the  rates  of  interest  fixed  by  statute,  it  is  usurious  and 
void,^  but  if  the  statute  authorizes  the  charge,  then  usury  laws 
do  not  apply .^ 


'An  invest! fjator  in  this  line  will 
consult  Dexter's  Co-operative  iSav- 
ings  and  Loan  Association,  pp.  70 
et  spq. 

'Citizens',  etc  Company  v.  Utiler, 
48  Md.  455. 

^H(mie,  etc  ,  Association  v.  B'^ning, 
7  Bull.  174;  Montgomery,  etc.  As- 
sociation v.  Robinson,  (19  Ala.  413; 
Security,  etc.  Association  v.  Lake, 
63  Ala.  45a. 


Note.  In  some  courts  the  trans- 
action of  an  advancement  is  treated 
as  of  a  partnership  character:  Sil- 
ver v.  Barnes,  6  Bing  N.  C  180; 
Burbridge  v.  Cotton,  8  Eng.  L-  & 
Eq.  R.  57;  Seagrave  v.  Pope,  15 
Eng.  L.  &  Eq.  477;  Robertson  v. 
American,  etc.  Association,  10  Md. 
397;  yhannon  v.  Howard,  etc  Asso- 
ciation, 36  Md.  3S3;  Lister  v.  Log 
Cabin,  etc.  Association,  38  Md.  115; 


METHODS  OF  PREMIUM  CHARGES. 


77 


Sec.  23.  Auction  Premiums.  Tlie  manner  of  chare:- 
ing  the  premium  by  auction  of  monej-  is  the  one  usually 
contemplated  by  the  statute,  and  is  more  in  harmony  with  the 
general  scheme.  The  power  of  determining  its  cost  is  thus 
placed  with  tlie  borrowers  themselves,  and  the  managers  can- 
not impose  upon  them  an  arbitrary  rate.  If  the  statute  shows 
that  this  method  was  the  one  intended  by  the  legislature,  the 
courts  require  compliance  with  it.  So,  under  statutes  providing 
that  money  on  hand  shall  be  sold  to  the  member  who  will  pay 
the  highest  premium  for  the  preference  in  taking  the  loan, 
the  bidding  must    be   competitive  and   the   directors    cannot 


Williar  v.  Baltimore,  etc.  Associa- 
tion, 45  ]\ld.  54f);  Massey  v.  Citi- 
zens, etc  Association,  23  Kans  (j24; 
Delano  v.  Wild  (i  Allen,  1;  Clarks- 
ville,etc.  Associati  nv.  btephens,  26 
N.J.  Eq  351;  Shannon  v.  Dunn,  43 
N.  H.  191;  Bibb  County,  etc.  Asso- 
ciation V.  Richards,  21  Ga.  51)2;  Par- 
ker V.  Fulton,  etc., Association, 4G  Ga. 
166;  Patterson  v.  Albany,  etc,  Asso- 
ciation, 63  Ga.  373.  In  these  cases  it 
was  held  the  question  of  usury  is  to 
be  left  to  the  jury,  and  if  it  is  found 
that  the  organization  is  not  intended 
to  evMde  the  u.-.ury  laws,  but  has  for 
its  purpose  the  accumulation  of 
montlily  savings  to  procure  homes, 
there  is  no  usury  in  the  charge.  In 
other  courts  the  advancement  is  re- 
garded as  a  mere  loan:  JNIills  v. 
Sidisbury,  etc.  Association,  75  N.  C 
292;  Overby  v.  Fayetteville,  etc 
Association,  81  N.  CM;  Vann  v. 
Fayetteville.  etc,  Association,  75  N. 
C.  494;  Ltitham  v.  Washington,  etc. 
Association,  77  N.  C  .145;  Hanner 
V.  Greensboro,  etc.,  78  N.  C.  1»8; 
Hoskins  v.  Mechanics,  eti"..  Associa- 
tion. 84  N.  C.  338;  Smith  V.  Me- 
chanics, etc..  Association,  73  N.  C 
372;  Columbia,  etc.,  Association  v. 
Bollinger,  13  Rich.  Eq.  124;  Lin- 
coln, etc.,  Association  v.  Graham,  7 


Neb.  173;  Lincoln,  etc.,  Ass(iciation 
V.  Benjamin,  7  Neb.  181;  Mariin  v. 
Nashville,  etc.,  As'^ociation,  2  Cold. 
418;  Herbert  v.  Kenton,  etc.  Asso- 
ciation, 11  Bush.  296;  Gordon  v. 
Winchester,  etc..  Association,  13 
Bush,  110;  Bechtold  v.  Brehm, 
26  Pa..  St.  269;  Reiser  v.  Wil- 
liam Tell,  etc  Association,  39  Pa. 
St.  137 ;  Burlington,  etc..  Associa- 
tion V.  Heider,  55  Iowa,  424;  Build- 
ing Association  v.  Timmins,  3  Phila. 
209.  In  these  ca:ses  the  premium 
charge  is  held  usurious,  being  unau- 
thorized by  statute.  In  unincorpo- 
rated associations,  or  in  associations 
without  statutory  permi.ssion  to 
make  a  premium  charge,  it  would 
become  a  qucNtion  whether  the 
transaction  was  to  be  regarded  as  a 
j.artner!^hip  in  character  so  as  to 
take  it  out  of  the  usury  law,  or  that 
it  was  a  mere  loan  falling  withia 
the  pale  of  that  law. 

Thp  partnership  theory  sustained 
by  courts  with  a  liberal  and  friendly 
disposition,  enabled  associations 
without  legislative  sanction,  to  en- 
force premiums.  Premiums  have 
now  a  more  geneJ-al  lesri'^lative  au- 
thority, and  the  transaction  is  more 
regarded  as  a  loan  In  building  as- 
sociation parlance,  it  is  treated  as 


78 


BUILDING  ASSOCIATIONS. 


refuse  a  bid  if  the  secnrity  is  properly  tendered;'  hence 
they  hav^e  no  right  to  fix  a  minimum  rate  of  premium,'  but 
the  loan  made  by  the  association  having  a  by-law  to  that  effect, 
but  not  made  in  pursuance  of  such  by-law,  and  unaffected 
there!)}',  is  binding  on  the  borrower.'  It  often  happens  in 
actual  jiractice  where  there  is  a  steady  demand  for  money,  that 
horizontal  or  uniform  premiums  based  upon  a  just  profit  to 
the  association,  are  of  advantage  to  the  association,  and  of 
more  fairness  to  the  members,  as  all  are  paying  the  same  cost. 
In  that  case,  a  member's  bid  at  the  uniform  rate  without 
deceit  or  compulsion  by  the  association,  would  be  binding, 
even  if  the  statute  contemplated  bidding,  but  if  he  refused  to 
make  a  bid  so  high,  the  directors  have  no  discretion  with  sur- 
plus funds  on  hand,  but  to  loan  him  if  his  bid  is  the  highest 
offered,  and  his  security  sufficient. 

Sec.  24.  Premiums  Fixed,  Uncliang-eable.  But 
the  premium  once  fixed  cannot  be  afterwards  changed.  The 
proportion  of  premiums  which  shall  be  paid  each  week  cannot 
be  increased  by  subsequent  action  as   to   existing  mortgages, 


such,  and  in  law  it  is  logically  a 
loan,  since  there  is  a  fixed  interest 
and  premium  charge,  with  security 
for  full  repayment.  These  condi-. 
tions  are  absolute,  and  their  per- 
formance is  required  until  tlie  stock 
security  increases  in  value  sufficient 
to  satisfy  the  debt,  when  the  associ- 
tion  obligates  itself  to  take  it  in  full 
satisfaction.  It  is  merely  a  mode  of 
payment,  and  if  it  fails  the  debt  re- 
mains unpaid  and  enforceable.  The 
proposition  laid  down  in  the  text 
seems  to  be  safe  for  observance. 
The  conflict  in  the  cases  upon  the 
Bubject  of  premium  as  usurious  has 
led  to  the  opposite  theories  of  the 
transaction  represented  in  the  two 
lines  of  cases  cited,  but  since  pre- 
miums latterly  are  authorized  in 
nearlj''  all  of  the  states,  the  views  of 
the  courts  in  those  cases  cannot  ap- 
ply to  associations  operating  under 


such  statutes.  The  directors  of  the 
association  should  be  guided  by  the 
statute  in  charging  premiums,  as 
the  power  is  safely  statutory,  not- 
withstanding the  partnership  theory 
supported  bj^  some  courts,  and  this 
is  the  tendency  of  the  recent  cases 

In  Illinois,  premium  is  regarded 
as  liquidated  damages  and  not  usu- 
rious: Holmes  V.  Smythe,  100  111. 
413;  Freeman  v.  Ottowa,  etc.,  Asso- 
ciation, 114  111.,  182. 

It  was  recently  held  by  the  Arkan- 
sas Supreme  Court  that  as  it  was  un- 
certain how^much  would  be  paid  as 
interest  until  winding  up,  premiums 
are  not  usurious :  Reeve  v.  Ladies', 
etc..  Association,  June,  '^5,  1893. 

'State  V.  Greenville,  etc.  Associa- 
tion, 29  Ohio  St.  92. 

"Stiles  Appeal,  95  Pa.  St.  123. 

'Orangeville,  etc.,  Association  v. 
Young,  9  W.N.  C.  251. 


FORMAL  APPLICATION  FOR  LOAN.  79 

unless  the  constitution  and  by-laws  of  the  association  clearly 
and  unmistakably  confer  such  authority.  And  where  the 
constitution  provides  that  the  installments  of  premium  shall 
be  50  cents  per  week  for  four  years,  and  after  that  time  the 
directors  shall  determine  the  amount  to  be  paid  weekly,  this 
lano^uage  does  not  clearly  give  such  authority  and  will  be  con- 
strued prospectively  and  to  authorize  a  larger  weekly  install- 
ment only  as  to  loans  made  after  the  change.' 

Sec.  25.  Preiniuni  Chargeable  to  Maturity 
only.  A  premium  bid  for  the  right  of  precedence  in  taking 
a  loan,  cannot  be  collected  after  the  maturity  of  the  loan.  So 
held  in  a  case  where  the  loan  was  for  a  specified  time,  and  the 
premium  a  percentage  on  the  amount  payable  periodically." 
And  this  is  true  though  the  time  of  payment  be  extended  by 
renewal  or  forbearance.' 

But  one  premium  can  be  charged  upon  a  loan,  so  that  where 
after  a  sheriff's  sale  on  a  mortgage,  the  stockholder  received  a. 
second  loan,  at  a  higher  premium,  he  is  entitled  to  be  repaid 
his  first  premium.* 

Sec.  26.  Formal  Application  for  Loan.  The 
amount  of  premium  to  be  paid  by  the  proposed  borrower  being 
determined,  it  is  advisable  for  formal  application  for  the  loan 
to  be  made  to  the  association.  The  application  should  give 
the  interest  and  premium  the  applicant  is  to  pay;  the  num- 
ber of  shares  to  be  pledged,  a  description  of  the  real  estate 
offered  as  securit}'-,  including  a  description  of  the  improve- 
ments thereon  or  those  proposed  to  be  placed  thereon,  the 
market  value  of  the  property,  its  rental  value,  description  of 
liens,  the  purpose  of  borrowing,'  the  age,  residence  and  occu- 
pation of  applicant.  These  are  chief  points  to  get  the  security 
before  the  directors  and  the  value   of  reducing   this   prelimi- 

'Burke  v.  Home,  etc.,  Association,  *Tho  association  is  flot  required  to 

7  Bull.  114;   Home,    etc,    Associa-  ascertain  the  use  of  the  proposed 

tion  V.  Boning,  7  Bull.  174.  loan :  Ilagerman  v.  Ohio  etc.  Asso- 

•c^avings,  etc.,  Association  v.  Stev-  elation,  25  Ohio  St.  ISO,  but  it  is  ad- 
ens,  5  Bull.  113.  visable  and  even  necessary  in  some 

'^^-  states  T.'hcre  the  borrowers  are  mar- 

^Flounders  v.  Ilawley,  78  Pa.  St.  ried  women. 
45. 


80 


BUILDING  ASSOCIATIONS. 


nary  contract  to  writing,  cannot  be  overestimated,  as  iu  con- 
troversies between  the  association  and  the  borrower,  it  may  be 
the  vital  point  of  the  whole  transaction. 

Sec.  27.  Appraisement.  The  application  should  be 
submitted  to  competent  appraisers,  appointed  by  the  directors, 
and  the  property  personally  viewed  by  them.  They  should 
give  their  written  opinion  as  to  its  value.  The  application 
thereupon  becomes  a  subject  of  investigation  by  the  board. 
The  report  of  the  api)ralsor3  is  merely  advisory.  The  direc- 
tors then  decide  upon  the  facts  thus  presented,  whether  or  not 
to  grant  the  loan. 

Sec.  28.  Abstract  of  Title.  Upon  the  acceptance  of 
the  loan,  an  abstract  of  the  title  to  the  property  oifered  as 
security  should  be  placed  in  the  hands  of  the  attorney  of  the 
association  by  the  proposed  borrower.  If  the  title  is  reported 
sufficient  by  the  attorney,  then  the  papers,  usually  consisting 
of  a  note  or  bond,  secured  by  mortgage  or  a  deed  of  trust,  and 
such  affidavits  as  may  be  necessary,  should  be  prepared  by  the 
attorney  or  a  skilled  draughtsman,  and  executed  by  the  borrow- 
er. The  association  is  then  ready  to  pay  the  money,  seeing 
that  all  existing  liens  are  paid  and  satisfied  of  record.  If  the 
loan  is  a  building  one,  the  association  must  use  precaution  to 
see  that  all  mechanics'  liens  against  the  property  are  satisfied 
and  that  there  are  no  enforceable  claims  superior  to  its  mort- 
gage arising  out  of  the  improvements.  The  surest  precaution 
is  to  take  an  indemnifying  bond,  with  sufficient  surety,  at  the 
time  the  loan  is  made. 

Sec.  29.  Interest  not  Collectible  on  Interest 
and  Preminm.  Building  associations  cannot  collect  in- 
terest on  premiums  or  interest  and  thus  compound  it;  so 
under  a  statute  authorizing  a  deduction  of  premiums  at  the 
time  of  the  loan,  interest  cannot  be  charged  upon  the  par 
value  of  the  shares  but  upon  the  money  actually  advanced.' 


'Forrest  City,  etc.,  Associntion  v. 
Gallagher,  25  Ohio  St.  20-5;  RL<k  v. 
Delphos,  etc..  Association,  31  Ohio 
St.  517;  Pfeister  v.  Wheeliug,  etc., 


Association,  19  W.  Va.  670;  Parker 
V.  United  States,  etc.  Association, 
19  W.  Va.  7(39;  Edelin  v.  Pascoe^ 
22  Grat.  b26.      . 


PROVISIONS  OF  MORTGAGE.  81 

Sec.  30.  Payment  of  Tiistalments.  Instalments 
must  be  paid  as  stipulated  until  tlie  accumulated  fund  sutiices 
to  pay  the  sum  agreed,  which  cancels  the  debt.  If,  however, 
the  association  is  dissolved  by  a  vote  of  the  shareholders  before 
maturity  the  instalments  cease.'  And  where  the  borrower  is 
required  to  pay  mouthl}'-  instalments  and  interest  thereon,  he 
cannot  be  required  to  pay  in  a  different  manner  as  in  solido. 
If  the  association  is  unable  to  perform  its  contract,  as  when  it 
fi-oes  into  the  hands  of  a  receiver,  a  borrovver  is  not  liable  to 
pay  further  dues,  etc.^ 

Sec.  31.  Provisions  of  Note  or  Bond.  Building 
associations,  with  power  to  loan  money,  have  the  right  to  take 
security  therefor,  as  provided  by  statute,  and  this  generally  is 
first  mortgage  on  real  estate.*  The  bond  or  the  note  is  the 
principal  debt  and  it  usually  provides  for  an  indefinite  num- 
ber of  small  periodical  payments  in  the  shape  of  dues  on  the 
stock,  together  with  the  premium  and  interest  charges  on  the 
loan  and  for  the  payment  of  tines  and  assessments,  if  any,  on 
the  stock  assigned.  The  mortgage  is  given  to  secure  the  per- 
formance of  this  bond  as  authorized  by  statute^  and  the  by- 
laws,'    Consequently,  the  mortgage  must  conform  to  them.^ 

Sec.  82.  Provisions  of  Mortg-iij^e.  If  the  statute 
prescribes  the  conditions  and  covenants  to  go  into  the  mort- 
gage, it  must  strictly  be  adhered  to,  but  if  the  statute  merely 
gives  the  general  scheme  of  the  association  without  making 
any  requirements,  any  form  which  will  accomplish  the  pur- 
poses of  the  statute  will  be  sufhcient.  But  when  the  statute 
makes  no  provisions  for  covenants  and  conditions  in  the  mort- 
gage, and  the  association  uses  a  note  or  bond,  as  is  commonly 

'Cason  V.  Seldner,  77  Va.  293.  'Shannon  v.  Howard,  etc.,  Associa- 

'CasoD  V.  Selduer,  supra.  lion,  MO  Md.  383. 

^Low  Street,  etc.,  Association  v.  'Building  Association  v.  Schuller, 

Zucker,  48  Md.  448.  3  W.  N.  C ,  Pa  431 ;  Smith  v.   Me- 

*Uui()n,  etc.,  Ast,ociation  V.  Masonic  chanic's,  etc..  Association,  73  N".  C 

Association,  2  Stew.  389;  Massej'v.  372;  Baltimore,  etc  ,  Society  v.  Tay- 

Citizens',  etc.,  Association,  22  Kans*  lor,    41    Md.   409;     Birmingham  v. 

6. '4.  Maryland,  etc.,  Association,  45  Md. 

'Franklin,      etc..    Association    v.  541. 
Mather,  4  Abb.  Pr.  274. 

6 


82 


BUILDING  ASSOCIATIONS. 


done  in  the  different  states,  those  instruments  really  express 
the  contract  between  the  association  and  its  borrowers.  The 
provisions  necessary  to  accomplish  the  results,  contemplated  by 
the  statute,  are  incorporated  in  them,  and  the  mortgage  secur- 
ing their  performance  merely  incorporates  and  identities  them 
as  the  provisions  of  the  bond  which  it  secures.  In  such  cases, 
in  drafting  a  bond,  the  statute  should  be  consulted,  that  the 
objects  of  the  association  may  be  carried  out,  and  in  draft- 
ing the  mortgage,  the  bond  and  its  provisions  should  be  incor- 
porated and  identified,  adding  such  other  provisions  as  may  be 
necessary  to  effectuate  the  purposes  of  the  mortgage  as  security, 
and  as  the  statutes  of  the  state  may  generally  require  con- 
cerning mortgages  of  real  property.  The  association  cannot 
deprive  the  member  from  the  ordinary  privileges  of  the  asso- 
ciation by  making  the  mortgage  in  the  ordinary  form.' 

Sec.  33.  Complaint  upon  Bond  or  Mortgage. 
The  association  may  sue  upon  either  the  bond  or  mortgage  or 
upon  both,'  and  the  complaint  should  show  the  necessary 
defaults  to  render  the  debt  due.  The  amount  due  the  associa- 
tion should  be  alleged  in  the  suit,  as  no  greater  sum  can  be 
recovered.'  When  the  association  has  shown  in  evidence  that 
there  are  shares  outstanding,  the  burden  is  on  the  defendant 
to  show  the  shares  had  matured  and  that  he  is  entitled  to  have 
his  mortgage  discharged.*  If  he  seeks  to  take  advantage  of 
any  failure  by  him  to  comply  with  the  charter,  as  by  signing  a 
paper,  the  burden  is  upon  him  to  show  that  he  did  not  sign  it. 


^Building    Association  v.   Robin- 
son, 46  L.  I,  Pa.  5. 

^Building  Association  v.  Hetzel, 
103  Pa.  St  507.  In  a  suit  on  a  note 
given  to  an  association,  wherein  the 
payment  of  the  note  depends  on  the 
payment  of  assessments,  the  man- 
ner of  mailing  the  assessments  need 
not  be  particularly  described  in  a 
complaint  on  the  note:  Borchusv. 
Huntington,  etc.,  Association,  97 
Ind.  180. 

'Mutual,  etc..  Association  v.  Tas- 


cott,  28  N.  E.  Rep.  801.  Under  the 
Indiana  code,  in  a  suit  tu  foreclose 
a  mortgage,  the  constitution  and  by- 
laws of  the  association  are  not 
proper  exhibits  to  the  complaint: 
Newman  v.  Ligonier,  etc.,  Associa- 
tion, 97  Ind.  295. 

*Concordia,etc.Association,v.Read, 
93  N.  Y.  474;  Tyrell,  etc  ,  Associa- 
tion, .v.  Haley,  20  Atl.  R-I0()3. 

^Nicely'sEstate,  3Kii]p,47;  Build- 
ing Association  v.  Lyons,  2  Kulp 
409. 


MORTGAGE  COVENANTS.  83 

Sec.  34.  Loans  to  Outsiders.  The  association  may 
take  the  mortgage  of  a  third  person  to  secure  a  loan  to  a  mem- 
ber, and  it  need  not  notify  snch  third  person  of  the  failure  of 
the  member  to  pay  the  obligation,'  and  the  surety  is  liable  to 
the  same  extent  as  his  principal,'  and  this  is  true  where  a 
member  becomes  surety  for  another  member.^  Unless  it  is 
authorized  by  statute,  the  association  cannot  loan  money  to 
outsiders,-*  but  a  loan  so  made  cannot  be  defeated  by  the  bor- 
rower on  that  ground.s  Even  if  outside  loans  are  authorized, 
members  should  be  first  accommodated. 

Sec.  35.  Loans  to  Married  Women.  The  mortgage 
of  a  married  woman  cannot  be  enforced  beyond  the  powers 
conferred  upon  her  by  an  enabling  statute,*  since  at  common 
law  she  has  no  riglit  to  make  such  contracts,  but  where  her 
husband  joined  in  the  bond  and  has  full  benefit  of  the  loan, 
he  is  not  within  the  rule.^  Extreme  care  should  be  exercised 
in  drawing  papers  where  married  women  are  under  legal  dis- 
ability or  where  it  is  partially  removed.  The  matter  should 
come  under  the  immediate  supervision  of  the  association's 
attorney,  who  by  custom  is  the  custodian  of  the  legal  blanks 
used  by  the  association. 

Sec.  36.  Mortgage  Covenants.  The  mortgage  run- 
ning durino"  the  association's  existence  without  fixed  termina- 
tion  is  not  void  for  uncertainty,"  nor   is   the   bond,   although 

'Pfeister  v.  Wheeling,  etc.,  Asso-  'Building  Association  v.   Rice,  8 

ciation,  19  W.  Va.  676.  W.  N.  C  12;   Building  Association 

'Saving  Fund  V.  Longshore,8  Luz.  v.  Mixell,  84  Pa.  St.  3Io;   Associa- 

L.  Reg.  "99.  tion  v.   Steele,   11  W.  N.  C.  204. 

"Johnson  V.  Elizabeth,  etc.,  Asso-  'Tanner's  Appeal,  95  Pa.  St.  118; 

ciation,  104  Pa.  St  394.  Wiggins   Appeal,   100   Pa.  St.  155; 

*Stalev.  Oberlin,  etc.,  Association,  Building    Association    v.    McDer- 

35  Ohio  St.  258;  Wolbach  v  Lehigh,  mott  2  Kulp.  203. 

etc.,  Association,   84    Pa.   St.    211.  «Robertsonv.  AmericaD,etc.,Asso- 

See  Mechanic's,  etc  ,  Association  v.  ciation,  10  Md.  397.    If  the  by-laws 

Wilcox,  24  Conn.  147;    Mechanics,  fix  a  time  for  the  maturity  of  the 

etc.,    Association  v.    Meriden,  etc.,  mortgage  debt    and  the  borrower 

Company,   lb.  lo9;  St  Joseph,  etc.,  pays  dues  to  that  time  the  mortgage 

Association  v.  Thompson,  19   Kans.  obligation    is    then    extinguished: 

321.  Lime  City,  etc.,  Association  v.  Wag- 

*Poockv.  Lafayette,  etc.,  Associa-  ner,  122  Ind.  78. 
tion,  71  Ind.  357. 


84 


BUILDING  ASSOCIATIONS. 


the  articles  provide  for  the  termination  of  the  association 
when  its  funds  attain  a  certain  sum.'  Covenants  on  the  part  of 
the  mortgagor  to  pay  taxes,'  lines,^  insurance*  are  enfo)-ceable, 
but  unless  incorporated  in  the  mortgage,  it  is  not  security  for 
them.s  These  are  usual  provisions  in  mortgages  of  this  char- 
acter/ And  a  stipulation  that  the  borrower  is  to  re-pay  the 
principal  sum  with  interest  and  penalties,  if  there  is  default, 
is  not  a  provision  for  a  penalty  that  equity  will  relieve 
from,  and  may  be  enforced.^  The  mortgage  should,  con- 
form to  the  provisions  of  the  charter  or  by-laws,  and 
where  it  was  taken  for  too  much  money  in  violation  of 
such  provisions,  a  conveyance  of  land  under  it  will  be 
enjoined  * 

Sec.  37.  Application  of  Payments.  Payments  by  a 
defaulting  borrower  not  appropriated  to  any  portion  of  his 
several  sources  of  indebtedness,  were  directed  by  a  court  of 
equity  to  be  applied  (a)  in  payment  of  monthly  lines,  (b)  dues, 


•Merrill  v.  IMcIntire,  70  Mass.  157. 

*Hnntington,  etc,  Association  v. 
Melsheimer,  14  W.  N.  C  3il. 

^Hagerman  v.  Ohio,  etc.,  Associa- 
tion, 23  Oliio  8t.  186. 

^Chicago,  etc..  Society  v.  Crowell, 
65  111.  454.  It  was  held  in  this  case 
that  an  action  will  lie  against  the  as- 
sociation for  breach  of  an  agree- 
ment to  insure.  The  measure  of 
damages  would  be  the  dividend  the 
insurance  company  would  be  able 
to  pay  in  case  the  insurance  had 
been  perfected  before  loss  and  not 
the  sum  agreed  upon.  The  associa- 
tion would  be  estopped  to  deny  it 
had  the  right  to  make  such  contract. 
The  secretary,  having  made  simiar 
contracts  without  personal  intere&t, 
and  the  company  received  the  per- 
sonal benefits  of  them,  the  court  held 
it  would  be  inferred  that  he  acted 
with  knowle(ige  of  directors  and 
was  authorized  to  so  act. 


'Hamilton,  etc..  Association,  v 
Reynolds,  5  Duer,  671 ;  Hazel,  etc., 
Associationv.  Groesbeck,  41  L  1. 16; 
but  where  fines  were  not  provided 
for  in  the  mortgage,  but  were  paid 
by  the  borrower,  it  was  held  he 
cuuld  claim  no  credit  on  the  mort- 
gage debt:  Clarkville,  etc.  Associa- 
tion V.  Stephens,  26  N.  J.  Eq  351. 
*But  if  the  parties  iucorpoi  ate  unus- 
ual but  lawful  provisions,  the  courts 
will  uphold  the  contract,as  where  a 
mortgage  provided  for  paj'ment  of 
the  principal  in  one  year  and  inter- 
est monthly  and  one  dollar  per 
month  for  monthly  contribution,  it 
was  held  that  the  mortgaae  remains 
as  security  for  the  monthly  dues : 
Everham  v.  Oriental,  etc.,  Associa- 
tion, 47  Pa.  St.  352. 

'Concordia,    etc..    Association  v. 
Eead,  '(3  N.  Y.  474. 

*Smith  V.  IMechanics', etc.,  Associ- 
ation, 73  N.  C.  372. 


PAYMENTS  ON  STOCK  85 

(c)  interest.'  But  upon  the  principle  that  a  creditor  may 
Apply  payments  upon  such  items  of  the  debt  as  he  may  elect, 
it  would  seem  that  the  association  in  justice  to  itself  and  with- 
out injury  to  the  borrower,  might  apply  his  payments  when 
not  directed  by  himself  to  the  discharge  of  (a)  lines,  (b)  inter- 
est and  premium,  and  (c)  the  balance  on  his  stock.  This 
application  would  seem  forcibly  right  when  it  is  considered 
that  he  is  debtor  to  the  association  in  two  ways,  first  on  his 
Btock,  and  second  on  his  loan,  and  the  association  should  have 
the  right  to  treat  a  payment  as  discharging  the  cost  of  the 
loan  debt,  since  it  cannot  enforce  interest  on  that  cost  if 
delinquent,  whereas,  it  may  protect  itself  on  the  stock  debt  by 
tines.     The  application  we  have  given  is  the  just  one. 

In  case  of  non-borrowers,  the  same  application  is  to  be 
made,  omitting,  of  course,  the  interest  and  premium. 

Sec.  38.  Assig-nmeiit  of  Shares  as  Collateral 
Security.  Usually  in  borrowing  money,  the  shares  of  the 
borrower  are  assigned  to  the  association  as  collateral  security. 
This  assignment  does  not  relieve  him  from  his  covenant  to 
make  monthly  payments  on  his  stock  or  on  account  of  fines." 
Upon  such  assignment,  the  association  is  invested  with  their 
ownership  for  all  purposes  of  dominion  of  the  debt  secured.' 
After  a  sale  to  the  association  in  liquidation  of  the  shares,  a 
member  cannot  again  sell  the  shares,*  as  he  has  thereby  lost 
membership. 

Sec.  39.  Payments  on  Stock  IVot  Ipso  Facto  Pay- 
ments on  Loan.  The  borrower's  liability  on  his  stock  and 
his  liability  on  his  loan  being  different,  payments  on  his  stock 
are  not  ipso  facto  payments  on  the  mortgage  debt  or  loan. 
The  distinction  is  not  clearly  kept  in  the  practical  manage- 
ment of  the  association,  but  the  law  holds  the  distinction,  and 
requires  ajipropriation  by  the  association  or  application  by  the 

'Clarksville,  etc.,   Association  v.  'Schlessinger's  Estate.lLawTimes 

Stephens,  26  N.  J.  Eq  351.  But,  see,  N.  S  lo. 

Building  Association  V.  Taylor,  13  *M ichignn,  etc., Association, v.  Mc- 

W.  N  C.  13.  Devitt,  77  Mich.  1. 

*White  V.  Mechanic's,  etc.,  Asso- 
ciation. 23  Grat.  233. 


86 


BUILDING  ASSOCIATIONS. 


member,  to  effectuate  that  purpose.  A  member  may,  then,  at 
any  time  apply  his  stock  payments  as  a  credit  on  his  debt  by 
paying  in  cash  the  balance,  if  any.  A  creditor  of  the  member 
cannot  compel  such  application  to  reduce  the  mortgage,'  but 
the  law  regards  a  person  holding  a  second  mortgage  on  the 
property  mortgaged  to  the  association,'  or  a  purchaser  of  the 
property,*  as  holding  more  favored  positions,  and  to  be 
equitably  entitled  to  have  the  application  made  by  the  associ- 
ation, so  as  to  reduce  the  lien  on  the  property. 

When  a  borrower  desires  to  withdraw,  he  gives  the  associa- 
tion such  notice  as  may  be  provided  in  the  by-laws.  He  may 
then  elect  to  have  the  withdrawal  value  of  his  shares  applied 
on  his  loan,  by  paying  the  balance,  and  his  shares  of  stock  will 
be  cancelled,  which  will  terminate  his  membership.  Or  if  he 
has  defaulted  in  his  payments,  he  may  elect  to  have  the  value 
of  his  stock  applied  on  his  debt  and  the  society  is  entitled  to 
recover  the  balance.'     The  borrower  is,  therefore,  not  entitled 


'Conrow  v.  Spring  Garden,  etc., 
Association,  21  Leg.  Int ,  109;  Build- 
ing Association,  v.  Eaber,  11  Phila. 
546;  Kehler  v.  Miller,  4  Leg.  Goz. 
125;  Spring  Garden  Association 
V.  Tradesmen's,  etc,  Association,  46 
Pa.  St.  493;  Sunbury,  etc.,  Associa- 
tion v.  Martin,  1  Luz.  L.Reg.  147; 
Delaware,  etc..  Association  v.  Keller, 
2  W.  N.  C.  29;  Selden  v.  Building 
Association,  lb.  481 ;  Building  Asso- 
ciation v.  George,  3  lb.  239;  North 
America,  etc,  Association  v.  Sutton, 
35  Pa.  St.  463;  Barker  v.  Bigelow, 
15  Gray,  130;  Mechanics,  etc.  Asso- 
ciation V.  Conover,  1  McCart  (N.  J.), 
219;  Hoboken,  etc,  Association  v. 
Martin,  2Beas.  (N.  J.),4i7;  Hekeln- 
kaemper  v.  German,  etc ,  Asso- 
ciation, 22  Kfins.  549;  Houlette's 
Estate,  2  Chest.  511 ;  Link  v.  Build- 
ing Association,  89  Pa.  St.  15;  and 
see  Building  Association  v.  Roan,  9 
W.  N.  C.  15;  Flynn  v.  Saving  Fund, 
37  L.  I.  (Pa.)  333;  Diemer  v.  Egolf, 


Chest.  55;  Greenfield's  Estate,  lb. 
356;  Whilden  v.  Broomall,  1  Del. 
(Pa)  142;  Harris's  Appeal,  18  W. 
N.  C.  14;  In  re  Treffeison,  3  Kulp, 
308;  Oliver's  Estate,  1  Del.  (Pa) 
358. 

*  Hoboken,  etc,  Association,  v. 
Martin,  3  Beas.  (N.  J )  427. 

^Herbert  v.  Mechanics,  etc.,  Asso- 
ciation, 17  N.  J.  Eq.  497;  People's, 
etc.,  Bank  v.  Collins,  27  Conn.  142  ; 
Phillipsburg,  etc.,  Association  v. 
Hawk,  27  N.  J.  Eq.  355.  See 
Authorities,  p.  88  n.  4. 

*\Vhen  the  by-laws  provided  that 
if  the  mortgagor  desired  to  redeem 
from  his  mortgage  he  should  apply 
to  the  directors, "  who  should  decide 
the  amount  to  be  paid,"  it  was  held 
the  borrower  should  pay  the  sum 
advanced,  adding  unpaid  interest, 
deducting  the  amount  of  dues  al- 
ready paid,  without  interest,  and 
making  no  deduction  for  entrance 
fee:    Barker  v.  Bigelow,  15  Graj, 


PAYMENTS  ON  REASSIGNED  STOCK. 


87 


to  any  credit  for  payment  of  dues,  unless  the  association 
chooses  to  make  such  application;  or,  unless  he  elects  for  the 
association  to  make  such  application,*  And  the  credit  is  the 
withdrawal  value  of  the  shares'  to  be  ascertained  by  the  char- 
ter and  by-laws  without  regard  to  the  improper  withdrawal  of 
shares  by  other  stockholders.'  The  "value,"  it  is  held,  is  to  be 
ascertained  by  the  number  of  stock  payments  (dues)  excluding 
interest  or  profit  and  less  expenses,*  J3ut  he  is  not  entitled  to 
the  value  of  shares  in  another  series," 

The  borrower  is  not  compelled  to  make  this  application  of 
his  stock;  he  may  pay  off  the  loan  and  retain  his  stock.* 
When  the  borrowing  stockholder  elects  to  apply  his  stock  in 
payment  of  his  loan,  the  proper  course  is  to  deduct  from  the 
ascertained  value  of  the  stock  all  arrearages  thereon,  and  to 
credit  the  balance  on  the  loan.^ 

Sec,  40.  Paynients  on  Reasslg-ned  Stock.  Where 
stock  is  reassigned  on  a  second  loan,  payments  thereon  are  to 
be  applied  to  such  loan  in  the  absence  of  any  specific  appro- 
priation,*    If   the  association   with   knowledge  of   a   second 


180;  but  see  People,  etc.,  Associa- 
tion v.  Furey,  20  Atl.  R.  890,  where 
it  was  held,  on  foreclosure,  as  be- 
tween the  society  and  member,  the 
former  is  not  bound  to  apply  the 
etock  payments  on  the  debt  as  the 
member  is  not  injured,  as  he  will 
receive  the  benefits  of  those  install- 
ments on  the  increased  value  of  the 
shares. 

'Assignments  of  shares  to  a  third 
person  will  prevent  such  applica- 
tion. 

'Saving  Fund  v.  Cake,  2  Leg.  Rec 
Rep.  172 ;  Watkins  v.  Building  Asso- 
ciation, 97  Pa.  St.  514;  Building  As- 
sociation V.  ilorgan,  2  Kulp,  19, 

'Building  Association  v,  Galla- 
gher. 3  Law  Times,  N.  S.  101. 

^Building  Association  v.  Groes- 
beck,  41  L.  I.  16;  Mechanics,  etc, 
Association  v.  Conover,   1   McC.irt. 


219;  Watkins  V,  Workingmen's,  etc., 
Association,  10  W.  N.  C.  414.  Under 
a  by-law  providing  upon  the  death 
of  a  member,  his  legal  representa- 
tive might  upon  notice  receive  the 
net  value  of  his  shares,  it  was  held 
the  proper  moae  of  determining  that 
value  was  to  ascertain  the  market 
value  of  the  shares:  Babcock  v. 
3Iiddlesex,  etc.,  Company,  28  Conn, 
302. 

^Saving  Fund  v.  Cake,  supra. 

^Springville,  etc.,  Association  v. 
Raber,  3  J  Leg.  Int.  Pa.  329. 

'Building  Association  v.  Rood,  2 
Kulp.,  (Pa )  24'?. 

^Philadelphia,  etc..  Association  v. 
Moore,  47  Pa.  St.  233. 


88  BUILDING  ASSOCIATIONS. 

mortgage,  releases  its  mortgage,  its  debt,  so  far  as  the  subse- 
quent mortgage  is  concerned,  is  satisfied  to  the  extent  of  the 
value  of  tlie  stock;'  if  the  borrower  elects  to  have  such  appli- 
cation made,  only  the  balance,  if  any,  over  such  application, 
can  be  reached  by  creditors,^  for  it  is  an  absolute  payment. 

Skc.  41.  Assigned  Shares  Cannot  be  Credited. 
The  right  to  have  such  application,  if  not  directed  by  the 
member,  cannot  be  had  by  his  creditors,'  but  a  purchaser  at 
sheriff's  sale  is  entitled  to  have  the  value  of  the  shares  cred- 
ited,* and  a  surety  of  the  member  is  entitled  to  have  such 
stock  applied.*  But  a  borrower  who  has  assigned  his  shares  to 
a  third  person  as  collateral  security,  is  not  entitled  to  a  credit 
for  the  value  thereof." 

Sec.  42.  Liability  of  Borrower  under  his  Mort- 
gage for  Losses.  The  mortgaged  property  of  a  borrowing 
member  cannot  be  charged  under  his  mortgage,  to  make  up 
general  losses  for  the  benetlt  of  the  non-borrower.  Unless  the 
mortgage  so  provides,  that  is  a  personal  liability.  When  a 
covenant  is  to  pay  weekly  dues  and  tines  until  such  time  as  the 
association  might  have  sufficient  funds  to  pay  all  the  holders 
of  unredeemed  shares,  the  par  value  thereof,  clear  of  all  losses 
and  liabilities,  it  was  held  that  the  mortirao-ors  could  be 
required  to  contribute  to  losses  and  liabilities  only  by  the 
prolonged  payment  of  weekly  dues  in  the  continued  operation 
of  the  association.''  So  where  the  conditions  of  the  borrower's 
mortgage  have  been  wholly  fulfilled  by  him  in  good  faith, 
whilst  the  building  association  was  in  actual  operation  as  a 

'Washington,  etc.  Association,  v.  Building  Association  v.  Eshelbach, 

Beaghen,  27  N.  J.  Eq.  e»S.  7   Phila.   189;    Kelly  v.  Accommo- 

'Eariy's   Appeal,  7  W.  N.  C.  184;  dation,  etc,  Association,   2    Hhila. 

and    see    Building    Association    v.  237;     Saving    Fund     v.     Murray, 

Bayley,  1  Kulp,  315.  14  Leg.   Int.   13.3;    Columbia,    etc., 

^Kreamer  V.  Saving  Fund,  6 "W.N.  Association  v.  Dobbins,  15   lb.   45; 

C    267;     Building    Association    v.  Building  Association  v.  Rowe,  lb. 

Hungerbueliler,    93     Pa.    St.    2")8;  ^Massey  v.  Citizen's,  etc.,  Associa- 

Buildlng  Association  v.  Maniran,  2  tion,  22  Kan.  634. 

Kulp,210.     See  authorities  p.  8611.1.  *Schober  v.  Accommodation,  etc., 

•*Kupfert  V.  Guttenberg,  etc..  As-  Association,  85  Pa.  St.  2i3. 

fiociation,   30  Pa.  St.  465;  Hughes's  'Low  Si.  etc.,  Association  v.  Znck- 

Appeal,  30  Pa.  St.  471;   Overruling  er,  48  Md.  448. 


LIABILITY  OF  BORROWER.  89 

going  corporation,  and  before  its  being  placed  in  the  h mds  of 
a  receiver,  the  borrower  is  entitled  to  a  cancellation  of  his 
mortgage,  although  his  personal  lialjility  to  share  in  the  losses 
continues.'  This  rule  would  apply  to  associations  having  a 
fixed  period  of  termination  or  crediting  dividends  at  stated 
times.  In  a  serial  association,  that  does  not  make  a  tangible 
division  of  its  profits  until  it  matures  its  stock,  as  long  as  there 
were  losses,  thej  would,  in  effect,  postpone  the  maturity  of 
the  stock,  and,  thus,  necessarily  the  cancellation  of  the  mort- 
gage. But  where  the  by-laws  provided  that  on  payment  of  an 
amount  equal  to  the  sum  advanced,  with  interest  and  other 
charo^es,  the  mortorarje  should  be  released,  and  the  mort^awor 
should  should  "  at  once  cease  to  be  a  member,"  he  was  not 
liable  to  contribute  as  his  memebrship  was  terminated.' 

"When  there  is  a  loss,  it  is  deducted  from  the  profits,  and 
the  effect  is  to  postpone  the  maturity  of  the  shares,  and  there- 
fore the  payment  of  the  debt.  But,  suppose  the  loss  exceeds 
the  profit  fund,  and  there  is  immediate  necessity  to  extinguish 
the  claim  against  the  society,  the  next  resort  is  to  the  assets. 
Building  associations,  legally  speaking,  seldom  have  available 
assets  of  any  consideration,  since  mortgage  debts  are  not 
regarded  as  such,  as  they  are  only  a  source  of  revenue  which 
constitutes  what  little  available  assets  they  may  have.^  An 
assessment  on  the  stock  then  becomes  necessary,  and  questions 
may  arise  as  to  whether  or  not  the  mortgage  secures  such 
assessment.  If  the  mortgage  contemplates  securing  such 
assessment  then  it  is  an  essential  part  of  the  indebtedness.  If 
it  is  not  provided  for  by  that  instrument,  it  is  hard  to  see  why 
the  borrower  should  be  discriminated  against,  by  requiring 
the  mortgage  given  by  him  to  secure  a  loan,  should  also  hold 
his  property  for  an  assessment,  when  the  investor  escapes  with 
only  a  personal  liability.  The  logical  rule  would  seem  to  be, 
in   the   absence   of   a   mortgage   contract,    the  borrower  and 

^Evermanv.  Schmitt,  24  Bull.  •'36;  ^Lister  v.  Log  Cabin,  etc.,Associa- 

Sparrow  v.  Farmer,  26   Beav.  511;  tion,  38  Md.  115. 

Fiirmer  v.   Smith,  4  H.  &  N.  196;  ^McGrath  v.    Hamilton,  etc.,  As- 

llandley   v.  Farmer,  !i9  Beav.  362;  sociatiou,  44  Pa.  St.  1583. 
""•  'Iti  re  Doncaster,  etc.,  Society,  L. 
n.,  3  £q.  158. 


90 


BUILDING  ASSOCIATIONS. 


investor  are  precisely  in  the  same  situation  and  are  personally 
liable  for  losses  up  to  the  par  value  of  the  stock  held  by  them. 
Each  has  subscribed  for  stock  in  the  corporation  upon  which 
each  is  indebted.  The  investor  is  paying  his  with  the  inten- 
tion of  securing  a  lump  sum  as  the  result  of  his  savings;  the 
borrower  is  maturing  his  stock  for  the  farther  expectation  of 
cancelling  a  debt.  Both  have  contracted  with  the  association 
to  make  an  indefinite  number  of  payments  until  the  stock  i& 
fully  paid  up.  So,  by  their  contracts,  they  are  debtors  until 
that  time  is  reached  and  the  measure  of  their  liability  is  the 
amount  of  their  stock  subscription.'  The  fact  that  one  is  a 
borrower,  cannot  change  this  liability.  This  liability  would 
be  enforceable  in  favor  of  creditors  upon  insolvency,  as  in 
ordinary  corporations;  but  the  liability  may  be  usually  termi- 
nated under  the  statute  by  notice  of  withdrawal,  providing  the 
stockholder  is  not  in  arrears  to  the  association,  does  not  owe 
it  or  there  are  no  losses. 

Sec.  43.  Acknowledgment  of  Mortgajre.  The  bor- 
rowing member  must,  of  course,  give  some  evidence  of  his- 
indebtedness  to  the  society  and  this  generally  takes  the  form 
of  a  bond  or  note  comprehending  his  contract.  This  follows 
the  certification  of  the  title  by  the  attorney  of  the  society. 
To  secure  payment  of  the  bond  or  note,  the  mortgage  is  given^ 
but  the  contracts  are  separate. 

Upon  signing  the  mortgage,  it  should  be  acknowledged  by 
the  mortgagors  before  a  competent  officer,  usually  a'  notary 
public.  An  acknowledgment  is  an  authentication  of  an 
instrument  that  enables  it  to  be  used  for  purposes  of  evidence 
in  a  manner  different  from  what  it  could  have  been  previously. 
The  duties  of  an  officer  taking  an  acknowledgment  seem  to 
be  at  the  same  time  judicial  and  ministerial.  Judicial  in  that 
the  officer  has  to  determine  upon  the  identity  of  the  parties 
etc.,  and  ministerial  in  that  he  has  to  give  a  certificate  of  the 
facts  found.  Regarding  his  duties  as  judicial,  no  officer  may 
take  an  acknowledfrment  of  a  deed  in  which  he  is  interested. 


'State,  etc.,  Association  v.  Kellogg, 
63  Mo.  540. 


LEASES  BY  THE  ASSOCIATION.  91 

for  no  one  maj  be  a  jndore  in  his  own  case;  besides  it  would 
be  an  attempt  to  create  evidence  in  one's  favor,  an  attempt, 
too,  which  must  in  the  majority  of  cases,  be  altogetlier  una- 
vailing. It  lias  even  been  held,  a  notary  public  who  is  a 
etockholder  in  a  bank,  cannot  protest  a  note.' 

The  general  rule  seems  to  be  when  a  notary  is  a  party  in 
interest,  he  is  disqualified  to  take  the  acknowledgement.' 
However,  an  inferior  court  in  Ohio  has  held  the  secretary  of 
an  association  who  was  a  stockholder,  may  take  the  acknowl- 
edgement of  parties  to  a  mortgage.^  The  taking  of  the 
acknowledgment  by  an  officer  of  the  association  is,  to  say  the 
least,  improper,  and  in  view  of  the  conflicting  authorities,  it 
is  wiser  to  have  work  of  that  character  performed  by  persons 
not  having  connection  with  the  association,  as  stockholders  or 
officers.  Upon  the  execution  of  the  mortgage,  it  should  be 
registered  in  the  proper  office  to  give  notice  of  the  associa- 
tion's claim  as  to  all  persons  dealing  with  the  mortgat'-ed 
property. 

Sec.  44.  Leases  by  the  Association.  The  officers  of 
the  association  in  loaning  money  sometimes  realize  that  the 
margin  is  close  for  security  and  deeds  are  taken  and  leases 
given  for  a  rental  equal  to  the  dues,  premium  and  interest,  so 
as  to  vest  the  title  in  the  association,  and  avoid,  in  case  of 
default,  expensive  foreclosure  and  delay  in  perfecting  title  and 
recovering  the  money  invested.  It  should  be  borne  in  mind, 
that  every  conveyance  of  land  without  regard  to  its  form, 
which  is,  in  fact,  a  security  for  an  antecedent  debt,  or  for  a 
contemporaneous  loan  in  the  contemplation  of  a  court  of 
equity,  is  a  loan.*  In  considering  such  a  transaction,  the  im- 
portant inquiry  v.'ith  a  court  is,  was  the  form  of  contract  adopted 
intended  to  secure  the  payment  of  money  loaned  or  advanced? 
And  that  inquiry  is  to  be  determined  by  considering  the  con- 
tract, the  relations  of  the  parties,  and  all  the  attending  circum- 

'Bank  v.  Porter,  2  "Watts,  141;  'Horton  v.  Building  Association, 

Withers  v.  Baircl,  32  Am.  Dec.  754,  6  Bull  141. 

note.  ^Bryant  v.   Cowart,  21    Ala.  93; 

-Wilkowski  v.  Halle,  95  Am.  Dec.  Huglies  v.  Edwards,  9  Wheat.  489. 
374,  note. 


92 


BUILDING  ASSOCIATIONS. 


Btances.  Where  the  circumstances  show  that  the  parties 
contemplated  and  intended  no  more  than  security  to  the  asso- 
ciation for  the  money  loaned  or  advanced,  and  tliat  being  the 
intention,  they  stand  in  relation  of  mortgagor  and  mortgagee,' 
So,  where  a  building  association  having  power  to  loan  money 
to  its  stockholders,  and  also  to  purchase  and  lease  property  to 
them,  advanced  money  to  one  of  its  stock-holders,  or  at  his 
instance,  in  the  purchase  of  a  house  and  lot,  taking  the  title  to 
itself,  and  leasing  it  to  him  at  a  stipulated  annual  rent,  payable 
monthly,  and  the  association  covenanted  to  keep  the  premises 
insured  to  the  amount  of  money  advanced,  and  in  case  of  a  loss, 
to  apply  the  proceeds  of  insurance  to  re-building  or  repairing, 
for  the  benefit  of  the  stockholder,  who  covenanted  to  pay  taxes 
and  repairs;  and  the  stock  holder  was  to  be  entitled  to  a  con- 
veyance in  fee,  daring  the  continuance  of  the  lease,  on  making 
payment  of  the  money  advanced,  the  contract  was  held  to  be 
a  mortgage.' 

Sec.  45.  Satisfiiction  of  Mortgagee.  Upon  the  pay- 
ment of  the  mortgage,  either  by  money  or  maturity  of  the 
stock,  the  association  should  enter  satisfaction  of  the  mortgage 
upon  the  proper  records.^ 

Sec.  46.  Borrower  Entitled  to  Set  Off.  A  borrower 
may  not  only  settle  his  debt  by  his  stock,  or  actual  money,  but 
he  is  entitled,  as  an  ordinary  debtor,  to  pay  it  all,  or  any  part,  by 
set-off.  A  shareholder  who  had  made  a  mortgage  to  the  asso- 
ciation can  set  off,  or  have  applied,  as  against  the  amount  due 
from  hiin  to  the  association,  under  the  mortgage,  claims  held  by 
him,  these  claims  consisting  of  balances  due  from  the  associa- 
tion to  members,  who  had  withdrawn  from  the  association  and 
assio-ned  them  to  the  mortgagor;  and  there  being  nothing  in 
the  constitution  or  by-laws  of  the  association  which  made  it 
inequitable  to  allow  the  set-off  or  application,  having  regard 


'Mobile,  Ptc,  Association  V.  Rob- 
ertson, 65  Ala.  3i;9. 

«Ib. 

'And  the  borrower  when  sued 
upon  his  mortgage,  may  show  tliat 
a  proper  application  of  the  profits 


would  mature  the  stock  and  leave 
his  mortgage  satisfied:  Tyrrell,  etc., 
Association  v.  Haley,  139  Pa.  St. 
476.  lie  may  set  up  the  maturity  of 
the  stock  as  an  equitable  defense  to 
the  suit  on  his  morLgage :     lb. 


AMOUNT  PAYABLE  ON  FORECLOSURE.      93 

to  the  rights  of  others;'  bat  he  cannot  set  off  stock  assigned 
to  him  after  maturity  of  his  loan."  And  lie  cannot  prove  as 
a  set  off,  loss  suffered  by  him  by  reason  of  suspension  of  busi- 
ness by  the  association.' 

Sec.  47.  Ainoviiit  Payable  Ui)oii  Foreclosure. 
Whenever  a  mortgage  is  foreclosed,  the  amount  payable 
by  the  mortgagor  is  a  question  upon  which  there  has  been 
a  wide  divergence  of  opinion.  The  peculiar  character  of 
the  mortgage,  calling  as  it  does  for  an  indefinite  number  of 
small  payments,  for  an  uncertain  time,  is  likely  to  cause  per- 
plexity in  establishing  a  just  computation  of  the  amount  re- 
coverable in  a  foreclosure  suit,  when  partial  paj'ments  have 
been  made  on  the  borrower's  stock. 

The  manner  of  estimating  the  amount  recoverable  against  a 
defaulting  borrower,  may  be  statutory,  or  provided  for  in  the 
by-laws;  in  either  case,  the  manner  designated  must  be  fol- 
lowed.* In  the  absence  of  any  method  being  provided  by  the  as- 
sociation, some  courts  have  adopted  a  rule  requiring  the  proba- 
ble or  possible  duration  of  the  society,  to  be  approximated  by 
proof,  and  the  aggregate  of  all  the  subscriptions  stipulated  for 
in  the  mortgage,  to  be  calculated  as  they  would  accrue  during 
that  period;  to  this  sum  must  be  added  the  arrearages  and 
fines  standing  against  the  mortgagor,  and  the  whole  amount 
thus  found  is  wd)at  the  association  is  entitled  to  recover;  re- 
bating, however,  a  just  sum  for  interest  on  the  future  pay- 
ments, so  that  the  association  will  not  recover  interest  on 
the  loan  after  it  has  been  repaid  to  it.* 

•Ilennighausen  v.  Tisher,  50  3td.  Mueller,  8  rull.  07;    Hagerman  v- 

583.  Ohio,  etc.,    Associiuion,    25     Ohio 

"Building  Association  V.  Rood,  2  State,  18(j;   Windisch  v  Korman,  5 

Kulp,  210.  Bull.  (iG4;   Cincinnati,  etc.,  Aspocia- 

Uohnsfon  v.  Building  Association,  tion  v.  Flach.lCin.  S.  C.  R.  4(i8;  Ho- 

104  Pa.  St  304.  boken,   etc.  Association  v.  Martin, 

*Hekelnkaemper  v.  German,  etc.,  2  Beas  (N  J  )  427 ;  Central,  eic  ,As«o- 

Association,  23  Kan.  549.  ciation  v.  O'Connor, 5  Bull  S.W;  Fox 

•Robertson  v.  American,  etc.,  As-  v.  Cottage,  etc..  Association   81  Va. 

Bociition,  10  Ml  3'.)7;    McCahan  v.  677;  and  see  Building  Association  v. 

Columbian,  etc..  Association,  40  Md.  Leyden,  1  Bull.  IJG;  Building  Asso- 

226;  AUemania,  etc.,  Association  v.  ciation  v.  Eggen,  5  Bull.  732.  In  the 


94 


BUILDING    ASSOCIATIONS. 


Seo.  48.  The  English  Rule.  The  rule  adopted  in 
England,  is,  that  unless  the  rules  provide  otherwise  the  mem-  ^ 
ber  can  only  redeem  upon  the  terras  of  paying  all  the  sub- 
scriptions hereafter  to  become  due,  taking  into  account  the 
longest  possible  estimated  duration  of  the  society;  such  sub- 
scriptions to  be  taken  to  be  a  debt  presently  due  from  him;' 
adding  lines,  arrearages,  and  assessments,  if  there  be  any,  and 
taking  into  account  the  dues  paid  by  him.^  It  will  be  noticed 
that  the  rule  of  the  American  courts  is  substantially  the  one 
supported  by  the  English  courts,  basing  the  calculation  upon 
the  "  possible  duration  "  of  the  society,  modifying  it,  however, 
by  rebating  interest  on  the  future  payments. 

Sec.  49.  Kules  Laid  Down  Upon  Voluntary  Re- 
payment. The  statute  usually  provides  for,  and  it  is  gen- 
erally considered,  a  right  of  a  borrower  to  repay  his  loan.  The 
society  has  loaned  its  funds  to  him,  with  the  expectation  that 
he  will  keep  them  until  the  maturity  of  the  stock,  but  the 
statute,  by  its  liberal  interposition,  gives  him  the  right  to  re- 
pay his  debt,  just  as  he  may  terminate  his  membership,  yet 
seldom  has  the  legislature  defined  the  method  of  computing 
the  amount  to  be  repaid  by  him.  That  has  been  left  to  the 
associations,  and  in  the  absence  of  a  definition  by  them,  the 
courts  adopting  the  rule  of  "  possible  duration,"  have  said 
that  where  such  member  is  not  a  defaulter,  charged  with  vio- 
lating the  association's  rules,  but  is  exercising  a  right- vested 
in  him,  he  is  entitled  to  more  consideration  than  if  he  had 
been  sued,  and  to  his  dues,  considered  as  credits  on  his  debt,  a 
certain  proportion  of  the  profits,  by  way  of  interest,  should  be 
added.*     And  they  make  the  calculation  upon  voluntary  re- 


last  case  it  was  held  that  a  defeas- 
ance clause  in  the  mortgage,  provid- 
ing in  the  event  of  foreclosure  the 
amount  due  shall  be  ascertained  by 
taking  the  whole  amount  of  the 
loan,  and  deducting  credits  paid  in, 
is  void,  as  depriving  the  member  of 
the  benefits  he  is  entitled  to  as  a 
member. 

■Davis  Building  Society,  p.  293. 


^Mosley  v.  Baker,  12  Jur.  551 ; 
Seagrave  v.  Pope,  22  L.  J.,  Oh.  258; 
Fleming  v.  Self,  24  L.  T.  Rep.  101 ; 
Archer  v.  Harrison,  3  Jur.  N.  S.  194; 
Smith  V.  Pilkington,  4  Jur.  N.  S. 
58;  Farmer  v.  Smith,  4  H.  &  N. 
196.  These  are  the  leading  English 
cases  on  the  subject. 

'See  authorities,  supra  and  p.  95. 
post. 


UNCERTAINTY  OF  THE  FOREGOING  RULES.   95 

payment  upon  the  same  theory,  adding,  however,  the  same  in- 
terest on  the  stock  payments,  as  the  non-borrower  receives  npon 
withdrawal.  These  rules  underlie  the  American  cases,  where 
the  statute  or  by-laws  do  not  clearly  define  the  manner  of  cal- 
culating the  amount  of  repayment,  but  they  may  be,  and  should 
be,  superseded  by  by-law  provisions  for  a  method.' 

Sec.  50.  Uncertainty  of  the  Foreg-oiiig-  Rules.  The 
English  rule  of  estimating  the  amount  due  upon  voluntary 
repayment,  and  upon  default  by  "probable  duration,"  is  fol- 
lowed in  those  jurisdictions  which  regard  the  transaction  as 
an  advancement  on  the  shares  and  redemption  of  those  shares. 
But  it  seems  by  retaining  the  proposition  that  the  transaction 
is  merely  a  loan,  and  it  certainly  defines  itself  very  clearly  as 
such,  that  the  rule  of  the  English  courts,  or  as  modified  by 
the  American  courts,  cannot  fitly  be  invoked.  In  computing 
the  amount  to  be  paid  upon  voluntary  repajnnent,  and  upon 
default,  an  important  distinction,  suggested  by  the  different 
situations  of  the  members,  should  be  observed;  but  in  either 
case  it  is  of  but  little  effect  on  the  computation,  how  long  the 
society  will  possibly  run.  The  fact  is  fixed  and  certain,  that 
the  member  obtained  a  certain  sum;  another  fact  is  equally 
as  demonstrable,  that  he  has  paid  a  certain  amount  on  his 
stock.  If  he  is  in  default  the  society  may  foreclose,  and,  at 
his  instance,  it  is  bound  to  apply  the  value  of  the  pledged 
stock,  measured  by  the  dues  paid,  on  its  debt.     If  he  is  not  in 

■Hoboken,     etc.,    Association   v.  ciation,  31  Ohio.  St.  517;    Richards 

Martin,  2  Beas.  427;  Somerset  Co.  v.  Bibb  Co.,  etc.,  Association,  24  Ga. 

etc.,  Association    v.    Vandevere,  3  198;  Ocmulgee,  etc ,  Association  v. 

Stock,  382;  Citizens',  etc.,  Associa-  Thomson,  52   Ga.  4S7;  Winchester, 

tJon  V.  Webster,  25  Barb.  263;  City,  etc.  Association  v.  Gilbert,  23   Grat. 

etc..  Company    v.    Fatty,    I    Abb.  787;    Waverly,   etc..  Association  v. 

App.  Dec.  317;  Shannon  v.  How-  Buck,  64  Md.  338;  but  see   Overby 

ard,  etc..  Association,  36   Md.  383;  v.  Fayetteville,  etc..  Association,  81 

Lister  v.  Log  Cabin,  etc.,   Associa-  N.  C  56;  Iloskins  v.  Mechanics',  etc., 

tion,    38    Md.    115;     Robertson    v.  Association,  84  N.  C.  83;^;    Hekeln- 

American,  etc..  Association,  10  j\Id.  kaemper,  v.  German,  etc.,  Associa- 

397;    McCahan  v.   Columbian,  etc,  tion,  22  Kans.  54U;  Glynn  v.  Home, 

Association,  40  Md.  226;  Hagerman  etc.,  Association.  22  Kans.  746;  Wat- 

V.  Ohio,  etc.,  Association,  25  Ohio  kins  v.  Workingmen's,  etc.,  Associ- 

St.  186 ;  Risk  v.  Delphos,  etc.,  Asso-  ation,  97  Pa.  St.  514. 


96 


BUILDING     ASSOCIATIONS. 


default,  the  value  of  his  stock,  on  the  basis  of  its  withdrawal 
value,  should  be  credited  on  the  debt.  The  debt  and  credits 
are  certain  in  figures  and  enforceable  in  law.  Then,  it  seems 
to  us,  that  a  rule  so  complex  in  its  practical  application,  and 
including  a  great  element  of  uncertainty  in  estimating  proba- 
ble duration,  is  likely  to  miscarry  justice,  and  especially  is  this 
true  where  interest  is  charged  to  the  estimated  end.  The  du- 
ration depends  upon  several  conditions,  none  of  which  can 
with  any  certainty  be  foretold.  For  instance,  if  tliere  is  an 
accumulation  of  idle  money,  a  financial  stringency  or  loss,  the 
maturity  of  the  shares  is  postponed.  The  prosperity  may  be 
unbroken,  and  earlier  maturity  reached.  No  proof  in  prae- 
senti  can  surely  establish  an  intangible  matter  absolutely  in 
futuro^  and  no  one  can  say  how  much  will  be  required  by  dues, 
to  mature  shares,  unless  the  margin  of  profits  is  excluded.  If 
that  margin  is  excluded,  and  interest  is  rebated  for  the  proba- 
ble duration,  under  the  American  modifications  of  the  English 
rule,  it  is  simply  repaying  the  loan,  and  the  transaction  would 
be  simplified  by  so  terming  it. 

The  rule  as  applied  to  the  repaying  or  defaulting  borrower 
lacks  certainty,  and  therefore  may  be  productive  of  injustice. 
Sec.  51.  The  Natural  and  Los:ical  Rule.  The  ad- 
vancement of  money  on  the  shares  is  simplified,  in  considering 
its  legal  aspect,  by  regarding  it  as  a  loan.  The  rules  governing 
repayment  follow  naturally  and  logically. 

The  incorporating  statute  usually  permits  the  borrower  to 
withdraw,  upon  repayment  of  the  debt,  prescribing  the  basis  of 
withdrawal,  but  if  it  is  silent,  the  by-laws  should  provide  for 
a  withdrawal  value  to  be  credited  on  the  debt."  If  the  statute 
is  silent  on  the  subject,  the  by-laws  should  provide  for  the 
computation  of  the  amount  to  be  paid  by  the  default- 
ino-  or  repaying  borrower.  The  association,  granting  that 
the  right  of  repayment  to  the  borrower  is  just,  must, 
however,  protect  itself.  If,  upon  the  exercise  of  a  with- 
drawal   right,   the  member  is    returned   his   dues,   with   in- 


'Borden  State,  etc.,  Association  v. 
Hayes,  61  Md.  597. 


THE    NATIONAL.    AND    LOGICAL    RULE,  97 

terest,  there  is  no  reason  for  any  discrinnination  ap^ainst 
the  repaying  borrower,  and  he  should  be  given  interest  on 
repayment;  but  if  the  society  is  likely  to  suffer  loss  by  an 
inability  to  reloan  the  money  paid  back,  it  should  protect  it- 
self by  by-law,  requiring  the  payment  of  such  additional  inter- 
est as  will  cover  the  time  the  money  remains  unloaned.  If 
the  borrower  is  in  default,  having  violated  the  rules,  he  has 
forfeited  his  right  to  any  interest  profit,'  but  he  has  not 
thereby  forfeited  his  stock',  and  he  can  apply  that  as  a  credit 
if  he  chooses.  The  transaction  thus  readily  resolves  itself  into 
a  loan,  and  the  association  is  entitled  to  recover  the  balance 
with  any  fines  and  proper  charges.^  The  association,  then,  can 
make  an  equitable  settlement  with  the  defaulting  borrower,  by 
recovering  the  amount  of  his  loan,  with  all  arrearages  and 
fines, crediting,  however,  the  stock  payments;  and  if  the  mem- 
ber voluntarily  repays  his  loan,  the  association  may  credit  on 
his  debt  the  withdrawal  value  of  his  shares,  if  the  member  so 
elects,  and  desires  to  withdraw  his  membership.  If  the  stat- 
ute provides  for  voluntary  repayment  at  the  option  of  the  bor- 
rower, the  association  could  not  impose  any  conditions  upon 
the  repayment,  as  the  charging  of  interest  for  the  time,  suffi- 
cient to  reloan  the  money,  except  on  the  ground  that  the  reg- 
ulation isexercised  as  a  reasonable  one.  If  repayment  is  granted 
by  the  association,  without  statutory  compulsion,  additional  in- 
terest may  be  added  without  question,  to  protect  it  from  any  loss. 

If  interest  or  premium  is  deducted  from  the  loan,  there 
should  be  a  rebate  from  the  whole  amount  so  deducted,  as  the 
unexpired  time  bears    to   the    past   time. 

This  rule  avoids  intricate  calculation,  and  places  the  mem- 
bers upon  a  certain  and  just  footing. 

'Watkins  v.  Workingmens',   etc.,  sociation,    supra.    So    it    mny    bo 

Associaiion,  97  Pa.  St.  514;  Matter-  waived    by    implication:     North 

son  V.  Elderfield,  4  L  R.  Ch.   207;  America,  etc.,  Association  v.  Sutton, 

but,  see,  Building  Association  v.  Eg-  35  Pa.  St.  4G3. 

gen,  5  Bull.  75^-.  'flanner  v.  Greensboro,  etc.,  As- 

*Unless    there    is  ■  a    forfeiture  sociation,  78  N.  C.  Ib8. 
allowed  by  statute  and  it  must  then 
be  so  declared  by  the  Association: 
Watkinsv.  Workingmens',  etc.,  As- 

7 


98 


BUILDING     ASSOCIATIONS. 


Of  course,  if  the  statute  provides  for  a  method  of  compnta- 
tion,  that  course  must  be  pursued.  These  suggestions  are  only 
available  in  case  no  other  method  is  pointed  out. 

It  has  been  assumed  that  a  borrower  is  entitled  to  share  in 
the  profits  of  the  association  as  well  as  the  investor.  It  is  only 
in  those  jurisdictions  where  the  transaction  is  regarded  as  a 
redemption  of  the  shares,  that  it  is  held  that  he  is  not  entitled 
to  share  in  the  earnings,  while  the  better  weight  of  authority 
is  to  regard  it  as  a  loan,  and  both  kinds  of  members  stand  so 
far  on  the  same  footing." 

Sec.  52.  By-Laws  Should  Provide  for  Record 
Cancellation.  The  by-laws  should  prescribe  the  manner  of 
making  record  cancellations,  and  vest  that  authority  in  an  offi- 
cer, usually  the  president.  Unless  the  assent  of  the  associa- 
tion is  ac(|uired  in  some  such  way,  it  is  not  bound  by  the  can- 
cellation.* If  the  satisfaction  is  fraudulently  procured,  as 
where  the  secretary  falsely  reported  the  maturity  of  the  shares, 
and  upon  such  information  the  board  of  directors  directed 
satisfaction  to  be  entered,  a  court  of  equity  will  strike  off  the 
entry.*  If  the  borrower  vohintarily  pays  in,  to  get  a  release  of 
the  mortgage,  more  money  than  is  required  by  the  by-laws,  if 
he  knew  all  the  facts,  but  was  mistaken  in  his  legal  rights,  he 
cannot  recover  it  back.' 


'Overby  v.  Fayetteville,  etc.,  Asso- 
ciation, 81  N.  C  St) ;  Winchester,  etc., 
Association  v.  Gilbert.  23  Grat.  787; 
Cason  V.  Seldner,  77  Va.  293. 

''Winterer  v.  Building  Associa- 
tion, 44  L.  I.  122;  People  v.  Lowe, 
117  N.  Y.  175;  Seibel  v.  Building 
Association,  43  Oiiio  St.  371. 


^Baxter  v.  Mclntire,  13  Gray,  16S. 

^Callahan's  Appeal,  124  Pa.  St 
138. 

*Haigh  V.  United  States,  etc.,  As- 
sociation, 19  W.  Va.  792. 


CHAPTER    IX. 
FINES. 

Sectiott  1.    Necessity  of   Fines.         Section  4.    No  Interest  on  Fines. 

Section  2.    Must  be  Reasonable.  Section  5.    Are  Lien  on  Stock. 

Section  3.    Stop  after  Foreclos- 
ure. 

Section  1.  Necessity  of  Fines.  Fines  are  necessarily 
a  part  of  the  plan  of  an  association.  The  carrying  forward  of 
its  purposes,  conceived  of  strict  mutuality,  requires  of  each 
member  punctuality.  Upon  that,  largely  depends  the  suc- 
cess of  the  association.  If  a  member  neglects  his  payments, 
he  does  an  injury  to  the  other  members,  who  are  faithfully  ob- 
serving their  obligations;  it  therefore  becomes  necessary  to 
compensate  those  injuries  by  compelling  the  delinquent  to 
pay  a  small  additional  sum  each  week  for  the  profit  of  the  as- 
sociation. This  is,  in  principle,  liquidated  damages,  and  takes 
the  form  of  lines.  Or,  if  an  officer  fails  to  do  his  duty,  a  pen- 
alty by  the  way  of  lines  might  be  assessed  against  him,  if  pro- 
vided for  in  the  by-laws.  So  while  the  statute  generally  au- 
thorizes their  charge,  yet  it  has  been  held  that  lines  slightly 
in  excess  of  the  real  damages,  are  recoverable  as  stipulated 
damages.' 

'Shannon  v.  Howard,  etc.,  Asso-      Association,  117  Pa.  St.,  1  where  it 
ciation,  36  Md.  383;  Ocmulgpe,etc.,      was  held  that  such  a  fine  was  un- 
Association  V.  Thomson,  53  Ga.  427.      reasonable,  and  the  by-law  provid- 
The  fine  in  this  case  was  10  per     ing  therefor  was  void, 
cent,  on  the  dollar;  and  see  Lynn  v. 

99 


100 


BUILDING   ASSOCIATIONS. 


In  some  other  courts  it  is  held  that  where  statutory  author- 
ity is  wanting,  they  cannot  be  enforced.' 

Sec.  2.  Must  be  Keasoiiable.  Fines  should  be  assessed 
in  the  exercise  of  statutory  power,  and  must  be  reasonable." 
They  may,  however,  be  assessed  upon  the  theory  of  stipulated 
damages,  in  the  absence  of  a  statute.  If  they  are  oppressive  and 
extortionate,  the  association  is  hurt  as  well  as  the  delinquent 
member.  If  based  on  the  real  damage,  or  slightly  in  excess  of 
it,  to  the  association,  justice  is  well  measured  to  all  concerned.' 
They  can  be  imposed  only  byway  of  punishment,  for  some  de- 
linquency in  the  performance  of  a  duty,  wliich  the  member 
may  owe  to  the  corporation  by  reason  of  his  membership.  It 
is  unreasonable  to  assess  more  than  one  fine  for  the  same  de- 
linquency; that  is,  dues  payable  on  June  16,  cannot  on  June 
23,  be  fined  for  again.*  Under  a  power  to  fine  for  non  pay- 
ment  of  dues,  fines  cannot  be  charged  on  delinquent  interest;' 
the  authority  to  assess  fines  for  unpaid  interest  must  appear 
from  the  by-laws,  where  the  statute  does  not  limit  their  impo- 
sition to  dues,  and  they  then  may  be  enforced.* 

A  by-law,  which  imposes  a  fine  of  ten  cents  monthly,  on 
each  dollar  due,  has  been  held  to  be  unreasonable,  extortionate 
and  oppressive,  and  therefore  void/  but  a  fine  of  ten  cents  on 
each  $200,  where  power  is  given  to  impose  fines  of  limited, 
amount,  is  valid.^     A  fine  of  five  per  cent  of  the  total  amount 


'Lincoln,  etc,  Association  v.  Gra- 
ham, 7  Neb.  173;  Link  v.  German- 
town,  etc  (Association,  89  Pa.  St.  15. 

'Lynn  v.  Freemansburg,  etc.,  As- 
sociation, 1 17  Pa.  St.  1. 

*Hagerman  v.  Ohio,  etc.,  Associa- 
tion, 35  Ohio  St.  186;  Forrest  City, 
etc ,  Association,  v.  Gallagher,  25 
Ohio  St.  208;  Building  Association 
V.  Schuller,  3  W.  N.  C  431;  Pfeister 
V.  Wheeling,  etc.,  Association,  19  W. 
Va.  676. 

^Hagerman  v.  Ohio,  etc.,  Associa- 
tion, supra;  Forrest  City,  etc..  Asso- 
ciation V.  Gallagher,  supra;  Mc- 
Gannon  v.  Central,  etc.,  A'ssociation, 


19  W.  Va.  726 ;  Monumental,  etc., 
Society  v.  Lewin,  38  Md  445;  see, 
also,  Gouchenour  v.  Sullivan,  etc., 
Association,  119  Ind.  441. 

^Parker  v.  United  States,  etc.,  As- 
sociation, 19  Va.  744;  Shannon  v. 
Howard,  etc..  Association,  36  Md. 
383;  Clarksville,  etc.,  Association 
V.  Stephens,  26  N.  .T.  Eq.  351. 

«Parker  v.  Butcher,  L.  R,  3  Eq., 
762. 

'Lynn  v.  Freemansburgh,  etc. 
Associaiion,  supra. 

"Clarksville,  etc.,  Association  ▼. 
Stephens,  supra. 


ARE    LIEN    ON    STOCK.  101 

in  arrear,  was  held  not  unreasonable,  and  that  it  included  five 
per  cent  on  the  amount  of  previous  fines  and  other  payments, 
as  well  as  the  principal  and  interest,  in  arrears,  does  not  make 
it  unreasonable.'  Fines  can  only  be  collected  from  members.' 
The  mortgage  may  embrace  lawful  fines,  and  they  may  be 
charged  against  the  land,3  if  they  are  not  included  in  the  mort- 
gage, it  will  not  be  considered  as  security  for  their  payment/ 

Sec.  3.  Stop  After  Foreclosure.  When  fines  are  se- 
cured by  the  mortgage,  of  a  borrowing  member,  after  assign- 
ment as  collateral  security  for  the  mortgage  money,  they  do 
not  cease  on  filing  of  a  bill  to  foreclose  the  mortgage,  to  which 
the  stock  is  collateral,'  but  after  decree  of  foreclosure,  the  as- 
sociation cannot  assess  fines." 

Sec.  4.  No  Interest  on  Fines.  The  fines  should  be 
regulated  by  the  by-laws,  which  should  be  explicit  and  certain 
on  the  subject.  Interest  cannot  be  charged  on  fines,^  but 
after  decree  for  foreclosure,  they  become  a  part  of  the  princi- 
pal and  bear  interest.* 

Sec.  5.  Are  Lien  on  Stock.  The  association  holds  a 
lien  on  the  stock  of  a  member,  for  the  payment  of  the  fines 
legally  assessed,  and  he  cannot  withdraw  or  apply  his  stock  in 
cancellation  of  his  debt,  until  that  lien  is  satisfied,  or  cannot 
sell  his  stock  free  from  the  lien. 

^In  re    Middlesbrough,  etc.,  So-  *Building   Association  v.  Groes- 

ciety,  54  L.  J.  Ch.  592.  beck,  4  L.  I.  (Pa)  16. 

'Hagerman  v.  Ohio,  etc.,  Associa-  ^Union,  etc.,  Association,  v.  Ma- 

tion  2i  Ohio  St.  186;  Forrest  City,  sonic  Hall  Association,  2  Stew.  389. 
etc..  Association,  v.    Gallagher,   25  'Houlette's  Estate,  2  Chest.  511. 

Ohio  St.  208.  'Ingoldby  v.  Riley,  28  L.T.  N.S.  55. 

'Hagerman  v.  Ohio,  etc.,  Associar  ^Provident,  etc.,  Society  v.  Green- 

tion,  supra.  hill,  L.  R.,  9  Ch.  D.  123. 


CHAPTER   X. 


USUKY. 


Sectiok  1.    Definition. 

Section  2.    Premium   not  Usu- 
rious as  formerly. 

Section  3.    Premiums    Author- 
ized by  Statute. 

Section  4.    When  Interest  is  not 
Usurious. 


Sections.    Illegal   Interest  not 

Recoverable  by  Association. 

Section  6.    May   be   Recovered 
Back  by  the  Borrower. 

Section  7.    A  Personal  Defense. 

Section  8.    Rule  for  Officers. 


Section  1.    Definition.     The  mortgage,  bond  or  note  of 

the  association  to  be  valid  must  be  free  from  the  taint  of  usury. 
Usury  is  defined  as  the  taking  of  more  for  the  use  of  money  than 
the  law  allows,  or  the  extortion  of  a  sum  beyond  what  is  legal.' 
Seo.  2.  Premium  Not  Usurious  as  Formerly.  The 
question  of  usury  is  not  involved  in  the  transactions  of  associ- 
ations so  much  now  as  formerly.  In  the  earlier  associations, 
the  legislature  was  unwilling  to  grant  the  privilege  of  adding 
a  premium  charge,  thus  increasing  the  cost  of  money  beyond 
the  legal  rate.  The  usury  question,  in  the  reported  cases,  in 
nearly  each  instance,  arose  in  the  endeavor  of  the  association 
to  make  a  charge  for  preference  to  the  right  in  having  a  loan. 
It  was  held  that  usury  cannot  be  avoided  by  complicated 
transactions."     So  a  combination  of  interest  and  expenses  at  a 

•Tyler  Usury,  p.  35 ;  see  Associa-         'Martin  v.  Nashville,  etc.  Associa- 
tion V.  Bollinger,  12  Rich.  Eq.  124.      tion,  2  Cold.  418. 

102 


PREMIUM   NOT    USURIOUS   AS   FORMERLY. 


103 


higher  than  a  legal  rate  is  tainted  with  usury;*  if  the  borrower 
pays  more  than  the  legal  rate  by  arrangement,  no  matter  what 
its  form  is,  it  is  usury,'  but  it  is  not  every  transaction  increasing 


'Waverly,  etc.,  Associatioa  v. 
Buck,  64  Md.  338.  Expenses  of 
loan  do  not  effect  the  transaction  as 
usurious :  Iloboken,  etc.,  Association 
V.  Martin,  2  I>as.  437. 

*Williar  v.  Baltimore  etc.,  Associ- 
ation, 45  Md.  546;  Bates  v.  Peoples, 
etc..  Association.  42  Ohio  St.  655; 
Association  v.  Bollinger,  supra;  Lin- 
coln, etc.,  Association  v  Graham,  7 
Neb.,  173;  Mills  V.Salisbury,  etc., 
Association,  75  N.  C  292;  Melville 
V,  American,  etc..  Association,  33 
Barb.  103;  Thompson  v.  Gillison, 
28  S.  C.  534.  But,  see  Delano 
V.  Wild,  6  Allen  1;  Bowker  v.  Mill 
River,  etc..  Association,  7  Allen, 
ICO ;  however,  it  was  held  in  a  North 
Carolina  case  that  a  borrowing 
member  paying  usury,  would  not 
be  aided,  being  considered  in  ^arj 
delicto:  Latham  v.  Washington,  etc.. 
Association,  77  N.  C  145;  but  this 
doctrine  is  generally  denied.  In  or- 
der to  sustain  the  premium  charge 
not  authorized  by  statute,  the  Eng- 
lish courts  considered  associations 
as  partnership  arrangements  and 
such  charge  not  to  be  within  the 
usury  laws:  Silver  v.  Barnes,  6Bing. 
N.  C.  180;  Burbidge  v.  Cotton,  8  E. 
L.  &  E  57 ;  see,  also,  Shannon  v. 
Dunn,  43  N.  H.  194;  Montgomery 
etc.,  Association  v.  Robinson,  69 
Ala.  413;  Franklin  etc..  Association, 
V.  Marsh,  29  N.  J.  L.  225;  Concor- 
dia, etc..  Association  v.  Read,  93  N. 
Y.  474;  Merrill  v.  Mclnlire,  13 
Gray,  157;  St.  Louis,  etc..  Association 
V.  Augustin,  2  Mo.  App.  123 ;  Contra, 
Reiser  v.  Wm.  Tell,  etc..  Associa- 
tion V.  39  Pa.  St.  137;  Mechanic's 


etc.,  Association  v.  Wilcox,  24 
Conn.  147;  Baltimore,  etc.  Society, 
V.  Taylor,  41  Md;  Mills  v.  Salis- 
bury, etc..  Association,  svpra; 
Fcrrest  City,  etc..  Association 
V.  Gallagher,  25  Ohio  St.,  208.  In 
Parker  v.  Fulton,  etc.,  Association 
46  Ga.  166,  it  was  held  as  the  scheme 
involved  risk  of  losing  the  whole  or 
getting  less  than  the  legal  rate  of 
interest,  there  was  no  usury.  See, 
al.»o,  Bibb  Co.,  etc.,  Association  v. 
Richards,  21  Ga.  592.  As  the  stat- 
utes generally  authorize  the  fi.xing 
of  premium  charges,  they  are  taken 
out  of  the  usury  laws  and  the  prin- 
ciples  laid  down  in  the  above  cases 
have  no  application.  Premiums 
when  authorized  by  statute  are  held 
lawful  and  recoverable :  Jarrett  v. 
Cope,  68  Pa.  St.  67;  Franklin,  etc., 
Association  v.  Marsh,  supra; 
Hoboken,  etc.,  Association  v.  Mar- 
tin, supra;  Red  Bank,  etc,  Associa 
tion  V.  Patterson,  12  C.  E.  Green, 
223;  Citizens',  etc.,  Association  v. 
Webster,  25  Barb.  263;  West  Win- 
Bted,  etc..  Association  v.  Ford,  27 
Conn.  282;  Licking  Co..  etc..  Associ- 
ation V.  Bebout.  29  Ohio  St.  252; 
Robertson  v.  American,  etc.,  Associ- 
ation, 10  Md.  397;  Bowker  v.  Mill 
River,  etc..  Association,  supra; 
Shannon  v.  Dunn,  supra;  Massey 
V.  Citizens,  etc.,  Associa'ion,  22; 
Kans.  624;  McLaughlin  v.  Citi- 
zens Association,  63  lud  264:  Shaff- 
rey  V.  Workingmen's,  etc.,  A.ssocia- 
tion,  64  Ind.  (iOO;  White  v.  Mechan- 
ics, etc.,  Association,  22  Grat.  233. 
If  there  were  any  precedent  condi- 
tions to  a  recovery,  as  that  the  bor- 


104  BUILDING  ASSOCIATIONS. 

the  cost  of  money  that  will  involve  nsury;  so,  where  there  was 
an  agreement  that  retiring  members  of  a  building  association 
may  take  out  the  money  they  had  paid  in,  and  interest  thereon, 
at  a  certain  rate  above  the  legal  rate,  it  was  held  that  it  is  not 
open  to  the  objection  of  usury.  Such  addition  is  not  interest 
on  money  loaned,  but  an  adjudged  profit  on  the  money  put 
in/ 

Sec.  3.  Premiums  Authorized  by  Statute.  The 
statutes  in  nearly  all  the  states,  now  exempt  building  associa- 
tions from  usury  in  charging  premium,  so  that  when  the  cost 
of  the  money  by  the  addition  of  the  premium  to  the  interest 
is  increased  beyond  the  legal  rate,  there  is  no  nsury,  but  this 
privilege  extends  only  to  premiums,  and  the  association  has 
no  authority  to  increase,  by  any  device  or  system,  the  distinct- 
ively interest  charge  on  the  loan,  beyond  that  lixed  by  statute 
as  the  lawful  rate.  The  legislative  intention  in  allowing  pre- 
miums, was  to  confer  on  the  association  an  equitable  and 
profitable  method  of  selecting  its  borrowers,  by  requirino-  of 
them  a  bonus.  So  if  the  association  disregards  this  intention, 
and  by  any  form  increases  the  interest,  the  courts  promptly 
restrain  any  such  practice,  and  compel  it  to  refund  any  such 
over  charges. 

Sec.  4.  When  Interest  is  not  Usurious.  Interest 
at  the  lawful  rate  may  be  charged  on  the  principal  of  the 
loan,  without  regard  to  the  weekly  or  monthly  reductions/ and 
because  the  interest  is  payable  monthly  or  weekly,  does  not 
render  it  usurious.^  Interest  should  be  on  the  sum  advanced 
and  not  upon  the  par  value,  where  the  premium  is  deducted/ as 


rower  should  sign  an  agreement,  it  ''Red  Bank,  etc.,    Association    v- 

must  have  been  complied  with  be-  Patterson,  12  C.  E.  Green,  223. 

fore  there  can  be  a  recovery :  Build-  ''Baltimore,  etc.,  Society  v.  Taylor, 

ing    Association  v.  Lyons:  2  Kulp.  41  Md.  409;  Oak  Cottage,  etc.,  Assc* 

409.    See  cicely's  Estate,  3  Kulp,  ciation  v.  Eastman,  31  ]\[d.  556;  Con- 

47-  tra :    Citizens',  etc,  Association   v. 

'Jungkuntz  v.   Building  Associa-  'Webster,  25  Barb.  2C3. 
tioD,  6  Bull.  428. 

'City,  etc..   Company  v.  Fatty,  1 
Abb.  Ct.  App.  847. 


1 


MAY    BE    RECOVERED    BACK    BY    BORROWER.    105 

it  is  unlawful  to  charge  interest  upon  premiums  unless  per- 
mitted by  statute.' 

Sec.  5.  Illegal  Interest  not  Recoverable  by  the 
Association.  Mortgagors  are  only  liable  for  the  true  amount 
due  on  the  mortgage,  excluding  all  excessive  interest  exacted 
or  paid  in  the  shape  of  bonus  or  otherwise.'  A  loan  to  a  per- 
son not  a  member,  at  a  premium,  in  addition  to  interest,  is 
usurious,^  as  the  legislative  privilege  is  intended  to  apply  to 
the  members  only.  A  borrower  paying  legal  interest  and 
dues,  cannot  claim  usury,  because  he  did  not  receive  his  entire 
loan,  but  which  was  ready  for  him  at  all  times.* 

Sec.  6.  May  be  Recovered  Back  by  the  Borrovrer. 
If  usurious  intei*est  is  refunded  and  accepted  under  an  ao-ree- 
ment  that  only  legal  interest  shall  thereafter  be  collected,  it 
frees  the  note  from  the  taint  of  usury .s  Usurious  interest  paid 
may  be  recovered  back,  not  being  considered  voluntary.*  The 
measure  of  damages  depends  upon  the  statutes  of  the  different 
states;  in  some,  it  would  be  the  difference  between  the  debt, 
with  legal  interest  added,  and  the  amount  of  payments  made 
thereon,  computed  as  partial  payments  on  such  debt,' 

Sec.  7.  A  Personal  Defense.  Usury  is  generally  con- 
sidered a  personal  defense  and  the  purchaser  of  mortgaged 


•Hawkeye,    etc,    Association    v.  Company    v.   Whithed,  49  N.  W. 

Blackburn,  ^8  Iowa,  385;  Oak  Cot-  Rep.    318. 

tage,  etc  ,  Association  v.  Eastman,  31  ^Ilammerslough  v.  Kansas  City, 
Md.,  55G;  Jackson  v.  Cassidy,  C8  etc.,  Association,  79  JMo.  80. 
Tex.  283;  Watson  V.  Aiken,  55  Tex.  ^Phillips  v.  Columbia  City,  etc., 
536 ;  Forrest  City,  etc.,  Association  v.  Association,  53  Iowa,  7 1 9. 
Gallagher,  25  Ohio  St.  208.  Author-  ^Border  8tate,  etc  ,  Association  v. 
ized  in  Pennsylvania;  Association  V.  Hilleary,  68  Md.  53;  Williar  v.  Bal- 
Neurath,  2  \V.  N.  C.  95 ;  Associa-  timore,  etc..  Association,  45  Md. 
tion  V.  George,  3  lb.  239;  Selden  v  546;  Bexar,  etc..  Association  v.  Rob- 
Reliable,  etc..  Association,  32  P.  F.  inson,  78  Tex  163;  Philanthrophic, 
Smith,  3  !6.  etc.,  Association  v.  Mc.  Kulght,  35 

'Birmingham    v.  Maryland,  etc.,  Pa.    St.    470;   Skinner's    Ehtate,    4 

Association,  45  Md.  541.  Phila.  189. 

'Mechanics,  etc..    Association   v.  ''Bexar,  etc.,  Asflociation  v.  Robin- 

Meriden  Company,   24   Conn.    1.^)9;  Bon,  supra. 
Joseph,  etc.,  As.'^ociation  v.  Thomp- 
fion,  19    Kans.   321 ;   Vermont,  etc., 


106  BUILDING    ASSOCIATIONS. 

property,  assuming  the  mortgasje  debt,  cannot  set  it  up  in  an 
action  to  foreclose  the  mortgage.' 

Sec.  8.  Rules  for  Officers.  The  officers  of  the  associ- 
ation sliould  be  governed  in  fixing  tlie  interest  charges  on 
loans  by  the  statute.  If  premium  is  authorized,  there  is  no 
question  that  such  authority  takes  its  charge  out  of  the  usury 
statute.  If  not  authorized,  the  officers  should  safely  confine 
the  interest  rates  within  those  allowed  by  law. 

'People's,  etc.,  Bank  V.  Collins,  27  Bush  110;  Henderson,  etc.,  Associ- 

Conn.   142;    Stein  v.   Indianapolis,  at  ion  v.  Johnson,  88  Ky.  101;  see» 

etc..  Association,  18  Ind.  237.  als^o  Hawkeye,   etc.  Association  v. 

*In  Kentucky,  no  more  than  stat-  Blackburn,  48  Iowa,  3S5;    Burling- 

utory  interest  is  allowed,  and  the  ton,  etc.  Association  v.   Heider,  55 

charging  of  more  invalidated  the  Iowa,  424;  Baltimore,  etc..  Society 

contract.     Herbert  v.  Kenton,  etc.,  v.    Taylor,  41   Md.  409;    Lucas  v. 

Association,  11  Bush.  296;    Grodon,  Greenville,    etc.,   Association,     22 

V.  Winchester,  etc,  Association,  13  Ohio  St.  339. 


I 


CHAPTER  XI. 


POWER  OF  THE  ASSOCIATION  TO  BORROW 
MONEY. 


Section  1.    A  Practical  Aspect. 

Section  2.    English  Authorities. 

Section  3.    Americaa    Authori- 
ties. 

Section  4.    Weight  of  American 
Authorities. 

Section  5.    Implied    Power   to 
Borrow. 


Section  6.    Overdrawing    Bank 
Account  is  Borrowing. 

Section  7.    Resolution   to    Bor- 
row. 

Section  8.    The  Effect    of    As- 
signing Mortgages. 

Section  9.    No   Power   to   Sell 
its  Mortgages. 


Section  1.  A  Practical  Asi>ect.  In  the  course  of  ita 
business,  an  association  will  often  find  itself  short  of  monej 
to  supply  the  demands  made  upon  it.  The  applications  of 
borrowers  exceed  the  receipts,  both  temporary  and  for  some 
time  prospective;  or  a  series  should  be  paid  off,  or  some  por- 
tion   of    the    stock    has   matured  and  should  be  cancelled 

• 

In  the  building  season,  the  association  Unds  itself  linan- 
cially  cramped.  This  stringency  may  be  temporary,  as 
in  the  winter  season,  money  will  naturally  accumulate.  With 
these  conditions  confronting  it,  should  the  association  borrow 
money  to  relieve  its  embarrassment  ?  The  original  idea  was, 
strictly,  that  of  enforced  accumulations  of  members  as  the 
source  of  revenue.  Borrowers  were  not  so  numerous,  and 
were  educated  to  wait,  until  the  loan  fund  thus  created 
was  sufficient  to  satisfy  each  member,  in  the  order  of  pri- 

107 


108  BUILDING   ASSOCIATIONS. 

ority.  Bat  the  latter  day  association,  with  ns,  having  an  en- 
larged membership,  and  fliictnating  demands,  which  are  at 
times  beyond  its  funds,  is  differently  situated.  The  associa- 
tion should  have  money  to  meet  these  demands.  Very  often 
the  member  has  joined  to  secure  a  loan.  Some  provision 
must  be  made  to  suppress  the  discontent  of  disappointed  mem- 
bers. The  association  is  thus  threated  with  a  crippling  of  its 
membership  and  diminution  of  its  profits.  An  association 
surrounded  by  these  conditions,  unless  prohibited  by  statute, 
may  borrow  money  for  the  purpose  of  relieving  them.  It 
may  be  considered  as  necessary  to  accomplish  the  purposes  of 
the  association,  but  this  disposition  to  borrow  must  not  con- 
flict with  the  legislative  intention  in  incorporating  the  associ- 
ation, and  it  becomes  important  to  discover  tliat  intention. 
The  legislature  rarely  defines  that  right  to  borrow,  as  it  is 
considered  incidental  to  ordinary  corporations,  and  its  exercise 
is  left  to  the  control  of  the  courts.  But  a  building  association 
is  not  an  ordinary  corporation;  in  fact,  it  exercises  some  ex- 
traordinary privileges,  particularly  in  not  being  amenable  to 
the  usury  laws.  It  is  created  for  the  declared  purposes  of  ac- 
cumulating money,  and  lending  the  accumulations  to  its  mem- 
bers to  build  or  acquire  homes  for  themselves.  The  legislature 
devised  this  plan  of  co-operative  accumulations  for  the  pur- 
pose of  assisting  each  member  to  become  his  own  landlord. 
The  state  has  a  selfish  motive  in  the  promotion  of  a  building 
association,  as  through  its  workings,  it  is  planting  deeply  the 
roots  of  citizenship.  The  drifting,  thriftless  classes  are  offered 
a  school  of  economy,  and  the  earnest  and  economical  classes 
are  given  an  opportunity.  There  is,  then,  a  formation  of  a 
steady,  energetic  and  accumulating  citizen.  The  cares  of  the 
state  are  lessened  by  decreasing  poverty,  and  its  prosperity  is 
increased  by  growing  material  wealth.  We  may  clearly  con- 
ceive, then,  that  the  intention  of  the  legislature  in  the  creation 
of  building  associations  is,  first,  to  encourage  savings;  second, 
to  secure  homes  for  the  savers.  The  accomplishment  of  these 
objects  may  be  dependent,  partly,  upon  the  ability  to  borrow. 
Such  an  assumption  is  not  an  undue  one,  or  foreign  to  the 
legislative  conception  of  the  association.     By  its  silence,  the 


ENGLISH    AUTHORITIES.  109 

creative  power  left  the  association  with  the  limited  right  to 
borrow  as  its  legitimate  necessities  might  require.  This  prop- 
osition is  sustained  by  the  weight  of  authoi-ity. 

Sec.  2.  English  Authorities.  In  England,  the  ques- 
tion was  frequently  before  tlie  courts  prior  to  the  act  of  par- 
liament of  1874,  Borrowing  to  a  limited  extent  was  held 
valid,'  but  when  there  was  no  rule  of  the  association  authoriz- 
ing borrowing,  it  was  held  illegal  to  borrow,  and  a  person  who 
had  advanced  money  to  the  trustees  of  a  society  under  such 
circumstances,  was  held  not  to  be  a  creditor,  legal  or  equitable, 
of  the  society,  and,  therefore,  not  entitled  to  a  winding  up 
order;'  and  if  the  rule  did  not  fix  a  limit  of  the  amount  to  be 
borrowed,  it  was  held  illeojal.3  So  a  rule  authorizino:  unlim- 
ited  borrowing  was  held  ultra  vires.*  Where  the  limit  was 
exceeded,  and  the  society  derived  no  benefit  from  the  loan,  it 
was  held  that  it  was  not  liable,  but  that  the  directors  were 
personally  liable,  as  they  had  held  out  the  treasurer  as  the 
agent  of  the  society,  although  there  was  no  fraud  on  their 
part.' 

"Where  there  was  a  rule  authorizing  the  borrowing  of  money 
for  the  special  purpose  of  making  advances  to  members  who 
might  have  applied  for  them,  and  tlie  society  having  borrowed 
a  sum  of  money  not  actually  required,  to  meet  applications  at 
the  time  of  the  loan,  it  was  held  that  the  society  had  no  power 
to  take  the  loan.*  And  where  the  rules  authorized  the  trustee 
to  borrow  money,  and  spend  it  in  a  way  that  was  held  not  to 
be  for  the  legitimate  purposes  of  the  society,  payment  was  not 
allowed  to  be  enforced  ag;iinst  the  society.'  Where  there  was 
no  rule  authorizing  borrowing,  there  was  no  power,  but  money 
advanced  by  a  bank  which  was  the  depository  of  the  society, 

'Laing  v.  Reed,  L.  R.  5  Ch.  App.  'Chapleo  v.  Brunswick,  etc,  So- 

4.  ciety,  L.  R ,  6  Q  B.  D.,  GOG. 

'/ft  re  National,  etc.,  Society,  ex  'oSIoye  v.  Sparrow,  22  L.  T.  Rep. 

parte,  Williamson,  L.  K.,  5Ch.  App.      N.  S.,  154. 
3u9.  '//i     re    Durham    Society,    etc., 

'■'la  re  Victoria,  etc.,   Society,  L.      Society,  L.R.,  12  £q.,  610. 
R.  9  Eq.  GOrj. 

*Jn  re  Liverpool,  etc.,  Society,  15 

5.  J.,  177. 


110  BUILDING    ASSOCIATIONS. 

which  went  to  pay  legal  liabilities  of  the  society,  the  claim 
was  allowed.  The  rules  gave  the  directors  power  to  arrange 
for  advances  and  their  payment,'  But  where  a  lender  has 
deeds  belonging  to  some  of  the  members  deposited  with  him, 
the  court  refused  to  compel  him  to  surrender  the  deeds  with- 
out payment  of  the  money  for  which  they  were  held  as  secu- 
rity." Unless  the  rule  containing  the  power  was  certified  by 
the  registrar,  a  person  loaning  upon  the  faith  of  it  could  not 
enforce  his  claim  against  the  society .3 

Parliament,  in  1874,  enacted  a  statute  which  expressly 
empowers  a  society  to  borrow  under  prescribed  limits.  Under 
that  act,  any  society  may  receive  deposits  or  loans  at  interest 
within  the  limits  of  the  section,  from  the  members  or  other 
persons,  or  from  corporate  bodies,  joint  stock  companies,  or 
from  any  terminating  building  society,  to  be  applied  to  the 
purposes  of  the  society.  In  a  permanent  society,  the  total 
amount  so  received  on  deposit  or  loan,  and  not  repaid  by  the 
society,  shall  not  at  any  time  exceed  two-thirds  of  the  amount 
for  the  time  being,  secured  to  the  society  by  mortgages  from 
the  members.  In  a  terminating  society,  the  total  amount  so 
received  and  not  repaid,  may  either  be  a  sum  not  exceeding 
twelve  months'  subscriptions  on  the  shares  for  the  time  being 
in  force.  This  statute  gives  the  society  power  -to  borrow 
within  the  limit  fixed*  and  is  evidently  the  result  of  experi- 
ence among  English  societies,  that  their  purpose  can  better  be 
accomplished  by  limited  authority  to  borrow ;  and  it  is  a  powerful 
argument  in  favor  of  the  right  of  a  building  association  to  bor- 
row. As  will  be  observed  by  the  decisions  prior  to  this  act,  the 
courts  permitted  them  under  certified  rules  within  a  reasonable 
limit,  to  borrow,  if  the  provisions  of  the  rules  were  strictly  ob- 
served, but  as  statutory  authority  more  fully  established  the  con- 
fidence of  the  lender  in  such  securities,  the  right  was  incorpo- 
rated in  an  express  statute,  substantially  as  the  courts  had  been 

•Liquidator  ofthe  Blackburn,  etc.,  »Coetmor,  etc.,  Society  51  L.  T. 

Society  V.  CunlifEe,  52  L.  J.  Rep.      253. 
Ch.,  92.  *Cut  if  the  limits  are  fixed  small- 

"Wilson's  case,  L.  R.,  12  Eq.  521.       er,  they  must  be  observed :    Looker 

V.  Wrigley,  L.  R.,  9  Q.  B.  D.,  S97. 


AMERICAN    AUTHORITIES.  Ill 

holding  dnring  the  prior  half  century.  And  it  has  been 
receutlj  held  that  where  a  society  borrowed  money  to  an 
extent  greater  than  authorized  by  statute,  which  was  applied 
by  it  as  advances  to  members,  who  gave  the  society  mortgages 
to  secure  repayment  of  the  advances,  the  persons  from  whom 
the  society  borrowed  the  money  were  entitled  to  follow  it  into 
the  hands  of  the  members  to  whom  it  was  advanced,  and 
claim  against  the  mortgages  held  by  the  society  for  the  amount 
secured  thereby,  notwithstanding  the  society  had  deducted 
premiums  from  such  amounts,  when  making  the  advances  to 
the  members.* 

When  authorized  to  borrow,  mortgages  may  be  deposited 
with  lenders  as  security,  who,  thereupon,  are  entitled  in  the 
winding  up,  to  payment  out  of  the  assets,  after  satisfaction 
of  the  outside  creditors,  and  in  priority  to  all  claims  of  mem- 
bers. But  the  lenders  are  to  have  the  benefit  equally  and 
paripassu  of  a  first  charge  upon  the  general  funds  and  prop- 
erty.' 

When  the  rules  authorized  borrowing,  the  lenders  are 
entitled,  on  the  association  being  wound  up,  to  be  lirst  paid 
out  of  the  assets,  in  priority,  to  any  of  the  members.' 

If  borrowing  is  unauthorized,  it  cannot  be  upheld  on  the 
the  ground  that  the  directors  mistook  the  law,  but,  where  the 
money  went  to  the  legitimate  purposes,  the  lenders  could 
recover.*  When  the  society  directed  the  issue  of  paid  up  or 
deposit  stock,  at  a  fixed  rate  of  interest,  witli  tlie  right  of 
withdrawing  it  in  preference  to  all  other  shares,  it  was  held 
the  stockholders  were  entitled  to  be  paid  before  the  unadvanced 
members.' 

Sec.  3  American  Authorities.  The  principles 
underlying  the  English  cases  are  recognized  and  athrmed  in 
this  country.     The  implied  power  to  borrow,  within  restric- 

'Neath,  etc.,  Society  v.  Luce.L.  R.,  ^In  re  Mutual,    etc.,    Society  30 

43  Ch.  D.,  158.  Ch.  D.  434. 

•Murray    v.   Scott,  9  App.    Gas.  ■'Blackburn,     etc..       Society     v. 

519,  overruling  Laing    v.  Reed,  Cunliffe,  29  Ch.  D.,  902;  Owen  v. 

L.  R.,  5  Ch.  8.  Roberts,  57  L.  T.  N.  S.  81. 

'Murray  v.  Scott,  supra. 


112  BUILDING     ASSOCIATIONS. 

tions,  has  never  been  denied,  except  in  a  case  in  Ohio/  In 
that  case,  the  court  considers  that  associations  are  not  affected 
bj  the  doctrine  that  corporations  possess  the"  power  to  borrow 
money  which  may  be  needed  in  the  transaction  of  necessary 
business,  but  that  the  money  to  bo  loaned  by  associations  can 
only  be  properly  accumulated  in  the  manner  contemplated  by 
statute,  that  is,  by  dues,  fines,  premium  and  interest.  In 
other  courts  it  has  been  held  that  associations  have  implied 
power  to  borrow  money  for  legitimate  purposes.'  So  that  an 
association,  not  being  prohibited,  either  by  statute  or  by 
by-law,  from  borrowing  money,  may,  on  maturity  of  a  series 
of  stock,  borrow  money  to  pay  the  shares  of  the  non-borrow- 
inc  members  of  such  series,  instead  of  accumulating  funds  to 
pay  off  such  series.'  And  the  association  having  the  implied 
power  to  borrow,  has,  in  the  absence  of  express  prohibition, 
the  implied  power  to  assign  its  mortgages  and  bonds  as  secu- 
rity for  the  loan.*  The  association  would  be  estopped  by  the 
receipt  and  application  of  the  money  to  a  legitimate  purpose 
of  the  corporation,  from  setting  up  in  an  action  to  recover  it, 
a  want  of  power  in  the  corporation  to  make  the  loan.  The 
corporation  cannot  reap  the  benetit  of  the  money  loaned,  and, 
then  allege  a  want  of  power  to  make  it.'  The  directors  of  the 
association  being,  by  its  by-laws,  empowered  to  manage  its 
affairs,  the  corporation  cannot  defeat  the  recovery  of  money 
borrowed,  by  direction  of  the  directors,  on  the  ground' that  the 
directors  applied  the  money  to  an  unauthorized  purpose, 
unless  the  lender  knew  such  purpose  was  unauthorized.' 

'State  V.  Bui'dlng  Association,  35  'North  Tludson,  etc  ,  Association, 

Ohio  St.  2o8.     The   opinion  in  this  v.  First  National  Bank,  47  N.  W.  R. 

case  is  not  founded  upon  reasoning  (Wis)  300. 

or  authority,  and  absolutely  ignores  *Ib.    But  an  assignment  of  mort- 

the  English  cases.    It  is  not  entitled  gages  after  proceedings  to  wind  up 

to  much  weight  as  an  authority.  is  void  as  against  the  receiver ;  Hin- 

»Davi3   V.   West     Saratoga,    etc  man  v.  Ryan,  3  C  C.  (Ohio)  529. 

Union,  32  Md.  285 ;  Jones  v.  Build-  'lb;  Jones  v.   Buildina;  Associa- 

ing  Association,  94  Pa.  St, 215 ;  Jack-  tion,  supra;  Loan  Company  v.  Con- 

8on  v.  Myers,  43  Md.  452;  MuLh  v.  over.  5  Phila.  18. 

Dolfield,  43  Md.  466.  *North  Hudson,  etc.,  Association 

Y.  First  National  Bank,  supra. 


IMPLIED    POWER    TO    BORROWER.  113 

It  was  held  in  Pennsylvania  that  when  the  association  is 
authorized  by  its  charter  to  receive  money  on  deposit  from  it8 
stockholders,  to  bear  interest,  in  case  of  insolvency,  such  stock- 
holders are  creditors  as  to  their  deposits,  and  are  entitled  to 
ehare  pro  rata  with  other  outside  creditors  in  preference  to 
stockholders.  This  was  also  held  to  be  true  when  money  has 
been  received  from  persons  who  were  not  stockholders,  though 
the  association  had  no  authority  to  so  receive  the  money.* 

In  another  case  it  was  held  that  a  solvent  buildinf^  associa- 
tion may  assign  a  mortgage  in  payment  of,  or  as  collateral  for, 
a  debt;  and  in  an  action  on  a  mortgage  assigned  as  collateral, 
for  the  payment  of  an  order  given  to  a  member  on  his  with- 
drawal, it  is  unnecessary  to  determine  whether  the  consent  of 
the  directors  to  such  assignment  is  legal  under  the  statute,  pro- 
viding that  at  no  time  shall  one-half  of  the  funds  in  the  treas- 
ury be  applicable  to  the  demands  of  withdrawing  members 
without  the  consent  of  the  directors.* 

Sec.  4.  Weight  of  American  Authority.  The 
unquestioned  weight  of  authority  in  America,  is  to  give  build- 
ing associations  the  incidental  right  to  borrow.  The  question 
of  the  right  to  borrow  is  to  be  determined  by  enquiring  into 
its  objects  and  purposes.  It  has  conferred  upon  it  those  inci- 
dental rights  that  are  consistent  and  reasonably  necessary  to 
carry  on  its  business.  The  vital  question  is:  Is  borrowing 
necessary  to  accomplish  its  objects?  If  it  is,  then  upon  prin- 
ciple and  authority,  it  may  borrow. 

Sec.  5.  Implied  Power  to  BorroTT.  The  current  of 
English  decisions,  prior  to  the  act  of  1874,  is  that  it  has  a 
restricted  right.  The  American  cases,  excepting  the  Ohio 
case,  draw  the  same  conclusions.  Those  courts  consider  the 
borrowing  power  necessary  from  the  nature  of  its  business,  and 
hold  it  granted  by  implication  of  law.  It  may  be  necessary 
to  protect  its  interests  as  a  junior  lien  holder,  or  to  satisfy  the 
demands  of  borrowers.  If  the  association  is  unable  to  supply 
borrowers  from  its  regular  fund,  a  temporary  loan  wiU  satisfy 

'Criswell's  Appeal,  100  Pa.  St.  »  Queiu  vs.  Smith,  108  Pa.  St.  325. 
488. 

8 


114  BUILDING    ASSOCIATIONS. 

the  members,  and  when  idle  money  accumulates,  the  associa- 
tion can  pay  its  debt.  Borrowing  is  only  intended  as  an 
expedient.  To  become  a  permanent  borrower,  is  not  a  part  of 
the  corporate  plan  of  an  association  and  is  not  contemplated 
by  the  decisions  investing  the  power  to  borrow  in  the  associa- 
tion. Under  proper  limitation,  it  is  sanctioned  by  the  courts. 
That  limitation  is,  that  the  money  is  to  be  ap])Iied  to  an 
authorized  purpose,  yet  under  the  decisions,  the  association 
cannot  escape  its  obligation  to  repay,  because  it  applied  the 
money  to  an  unauthorized  purpose,  unless  it  can  show  that  the 
lender  had  knowledge  of  this.  The  rights  of  the  association  to 
borrow  is  thus  settled  upon  authority,  and  it  rests  further 
upon  sound  reasoning.  It  rests  upon  the  doctrine  of  implied 
power,  and  there  is  no  substantial  variance  between  the  appli- 
cation by  the  courts  of  that  doctrine  to  building  associations 
and  other  corporations. 

Sec.  6.  Overdrawing'  Bank  Acconnt  is  Borrow- 
ing. Prior  to  the  act  of  Parliament  of  1S74,  the  English  courts 
were  disposed  to  indulge  associations  in  overdrawing  their 
bank  accounts,  by  consent  of  the  bank,  without  applying  the 
rule  of  borrowing  as  limited  by  the  courts,  so  they  uniformly 
held  that  overdrawing  is  not  borrowing.'  This  distinction  is 
hardly  maintainable.  The  association  thus  uses  money  of  the 
bank  and  pays  interest  upon  it.  The  relation  of  creditor  and 
debtor  arises  and  it  is  difficut  to  conceive  why  overdrawing  would 
be  legal,  if  borrowing  is  illegal.  The  truth  is,  if  borrowing  is 
unauthorized,  such  overdrawing  is  a  mere  device  and  is  ultra 
vires  and  cannot  be  enforced.'  So  held  in  a  recent  English 
case,  but  the  bank  permitted  the  bank  to  hold  deeds  as  security 
for  money  advanced  to  pay  proper  debts  of  the  societj^  pre- 
sumably on  the  ground  that  the  society  could  not  dispute 
its  right  to  make  a  contract  from  which  it  had  reaped  ben- 
efits.' 

'  In  re  German  Mining  Company,  Blackburn,  etc..  Society,  v.  Cunlifie, 

23,  L.  J.  Ch.,  956.    In  re  Cein  Cil-  52  L  J.  Hep.  Ch  93 
cen,  etc,  Company,  i38  L.  J.  Ch.  78;  *  Brooks    v.  Bhickbiirn,   etc.,  So- 

Waterlow    v.   Sburp,  L.   R,   8  Eq.  ciety,  L.  R.,  9  App.  Ch.s.,  857. 
501,    doubted     in     Liquidators    of  *  lb. 


THE    EFFECT    OF    ASSIGNING    MORTGAGES.        115 

Seo.  7.  Resolution  to  Borrow.  In  making  loans  by 
the  association,  the  directors  of  course  are  to  be  governed  bj 
the  creative  statute.  If  there  is  no  prohibition  upon  borrow- 
ing, the  directors  may  borrow  for  the  legitimate  purposes  of 
the  association.  If  the  by-laws  or  rules  make  no  provision  for 
borrowing,  the  directors  at  a  legal  meeting,  with  a  quorum 
present,  should  pass  a  resolution  authorizing  the  loan.  That 
resolution  may  read  as  follows: 

"Whereas  the Association  is  in  need  of  money  to 

. .  state  object  of  borrowing — therefore;  Be  it  resolved,  that 
the  President  and  Secretary  of  this  association  are  authorized 
and  empowered  to  borrow  the  sum  of  $. . . .  for  ....  at  the 
rate  of  —  per  cent,  per  annum,  and  to  deposit  with  the  lender, 
bonds  and  mortgages  of  the  association,  as  collateral  security 
for  such  loan." 

Sec.  8.  The  Effect  of  Assigning  Mortgages.  As 
heretofore  cited,  the  decisions  both  in  this  country  and  Ensr- 
land,  authorize  the  assignment  of  mortgages  as  collateral 
security  for  the  re^^ayment  of  a  loan,  or  even  to  secure  a  with- 
drawing member,  who,  by  that  act,  has  become  a  creditor. 
Such  assignments  extend  only  to  the  association's  interest  in 
the  security.  No  right  of  the  mortgagor  can  thereby  be  affected. 
The  security,  as  any  other  security,  is  not  available  so  long  as 
the  mortgagor  complies  with  his  contract.  As  he  complies 
with  his  contract,  by  paying  his  weekly  dues,  he  is  decreasing 
the  association's  interest  in  the  mortgage  and  consequently, 
diminishing  the  security.  If  the  mortgagor  thus  continues 
in  compliance  with  his  contract  and  the  association  still  owes 
the  debt,  it  will  have  to  supply  other  mortgages  as  collateral, 
in  which  its  interest  is  large  enough  to  be  sufficient  for  pur- 
poses of  security.  And  so,  if  the  moitgagors  in  the  collaterals 
carried  out  their  agreements,  the  association  is  bound  to 
mature  their  stock,  but  if  their  loan  still  remains  unpaid,  the 
payment  and  cancellation  of  the  stock  cannot  take  place  until 
their  debts  are  paid  to  the  association.  The  mortgagors  may 
however,  pay  those  debts  by  their  matured  stock.  They  have 
the  right  to  apply  their  matured  stock  in  full  satisfaction  of 
their  mortgage  debts.     Wiiil©  the  loan  in  that  event  has  lost 


116  BUILDING    ASSOCIATIONS. 

its  specific  security  bj  these  continued  weekly  mutations  and 
the  maturity  of  the  stock,  yet  the  assets  which  have  come  out 
of  the  mortgage  into  the  general  fund  for  distribution,  are  sub- 
ject to  the  lien  of  the  debt,  and  must  satisfy  it  before  cancella- 
tion of  the  members'  stock  can  take  place. 

Thus,  it  is  readily  seen  that  the  assignee  of  a  building  asso- 
ciation mortgage  can  only  claim  the  society's  interest,  which  in 
in  the  process  of  time  may  be  reduced  to  nothing.  To  make 
such  mortgages  available  as  collateral  security,  the  association 
must  replace  those  when  its  interest  has  become  extinguished, 
by  others  where  its  interest  is  sufficient  for  the  purposes 
intended. 

Sec.  9  No  Power  to  Sell  its  Mortgages.  The  con- 
tract of  the  mortgagor  being  in  a  sense  personal,  and  not  to  be 
defeated  by  any  assignment  by  the  association,  it  would  be 
beyond  the  power  of  the  association  to  sell  absolutely  his 
morto-ao-e.  So  Ions  as  the  association  has  an  asset  in  the 
morto-age,  it  may  assign  it  as  collateral,  so  long  as  it  does  not 
conflict  with  its  corporate  objects,  but  it  cannot  infringe  upon 
the  rio-lits  of  the  mortgagor,  and  if  the  association  undertakes 
to  absolve  itself  from  the  contract  and  not  only  part  with  its 
interest  in  the  mortgage,  but  transfer  rights  therein  in  favor 
of  the  mortgagor,  and  against  itself,  it  is  doing  a  wrong  for 
which  the  injured  member  may  obtain  redress  against  the  asso- 
ciation, in  whatever  amount  he  has  been  damaged  by  the 
action  of  the  association,  in  placing  beyond  its  power  its  ability 
to  keep  its  contract  with  him.  The  courts  uphold  an  assign- 
ment as  collateral  security,  upon  the  theory  that  it  is  only  the 
association's  interest  in  the  mortgage  that  is  affected.  The 
assignee  can  in  no  way  interfere  with  the  mortgagor's  interest. 
So  that  if  the  mortgagor  defaults,  he  is  entitled  to  credit  the 
value  of  his  stock  and  if  he  does  not  default  he  is  entitled  to 
continue  his  payments  and  cancel  his  mortgage,'  disregarding 
the  assignment,  for  he  has  extinguished  the  association's  inter- 
est in  the  mortgage.     The  assignee's  lien  as  against  the  mort- 

'  Barton  v  Enterprise,  etc.,  Asso- 
ciation, 114  Ind.  226. 


NO    POWER    TO    SELL    ITS    MORTGAGES.  117 

gage  is  eo  instanti  extinguished,  but  it  then  attaches  to  other 
corporate  assets. 

In  selling  outright  his  mortgage,  the  association  undertakes 
not  only  to  sell  its  own  interest,  but  to  transfer  the  rights  of 
the  mortgagor.  It  is  plain,  upon  principle,  that  it  cannot  do 
this  without  his  consent.  And,  as  the  association  is  a  mutual 
affair,  it  becomes  a  question  whether  or  not  such  a  sale  would 
not  require  the  unanimous  consent  of  the  shareholders,  as  all 
are  interested  in  auj  tiual  disposition  of  its  assets,  or  anj  part  of 
them. 


CHAPTER  XII. 


DISSOLUTIOJ^  AND  SETTLEMENT. 


Section  1.    Dissolution  when  all 
stock  is  matured. 

Section  2.    Other  methods  of  dis- 
solution. 

Section  3.    What   acts  will  not 
dissolve. 

Section  4.    Dissolution  hj  unan- 
imous agreement. 

Section  5.    Effect    of    appoint- 
ment of  a  receiver. 

Section  6.   Final  settlement  with 
members  and  creditors. 

Section  7.      Settlement  before 
maturity. 

Section  8.  Assignment  for  credi- 
tors. 


Section  9.  Appointment  of  re- 
ceiver and  winding  up. 

Section  10.  Marshalling  of  as- 
sets. 

Section  11.  Liability  of  stock- 
holders. 

Section  12.  Liability  of  bor- 
rower for  debts. 

Section  13.  No  liability  for 
losses  under  the  mortgage. 

Section  14.  Liability  of  with- 
drawing member. 

Section  15.  Assets  to  be  distri- 
buted among  borrowers  and  non- 
borrowers  alike. 

Section  16.  Consolidation  of  as- 
sociations. 


Section  1.  Dissolution  When  all  Stock  is  Ma- 
tured. When  the  association  has  matured  all  of  its  slock,  it 
then  dissolves.  The  old  terminating  society,  with  its  one  series, 
entered  voluntary  dissolution  when  it  had  paid  oS  the  series. 
Under  the  present  systems,  the  serial  and  the  permanent,  there 
is  no  dissolution  by  the  maturing  of  a  series  or  part  of  stock. 
The  association  is  constantly  receiving  a  new  infusion  of  blood 
and  continues  its  corporate  existence  by  reason  thereof.     But 

118 


DISSOLUTION   BY    UNANIMOUS    AGREEMENT.     119 

the  dissolution  of  the  association  may  take  place  from  otlier 
causes. 

Sec.  2.  Other  3Tetliocls  of  Dissolution.  The  disso- 
lution of  a  corporation  mav  be  brought  about  bj  reason  of  (a) 
the  forfeiture  of  its  franchises  bj  the  adjudication  of  a  court, 
(b)  tbe  loss  of  its  charter  by  a  charter  provision  to  the  effect  in 
case  the  corporation  fails  to  do  certain  things  within  a  certain 
time,  (c),  the  repeal  of  its  charter  under  the  reserved  power  of 
the  state,  (d)  the  voluntary  surrender  of  the  franchises  by  the 
stockholders,  or  (e)  the  expiration  of  the  time  limited  for  its 
existence  in  the  charter.' 

Sec.  3.  What  Acts  will  not  Dissolve.  Except 
when  the  charter  is  lost  by  reason  of  the  second  provision,  the 
corporation  does  not  dissolve  of  itself.  For  instance,  neglect  to 
elect  officers  while  the  capacity  remains  in  the  members  to 
elect,  will  not  dissolve  it,'  nor  by  a  cessation  of  all  corpo- 
rate acts  and  business,'  nor  by  mere  nonuser  of  its  franchise, 
nor  by  insolvency,^  nor  by  death  of  its  stockholders.* 
Only  the  state  by  its  proper  officer  can  sue  to  forfeit  the 
charter,  and  whenever  it  misuses  its  powers,  the  state  has  this 
right.     A  stockliolder  cannot  maintain  the  suit.'' 

Sec.  4.  Dissolution  by  Unanimous  Agreement. 
The- stockholders  may,  by  unanimous  agreement,  wind  up  the 
association  before  the  time  prescribed  by  statute,  and  such 
agreement  is  binding,  not  only  on  the  member,  but  on  the 
assignee  of  such  member,*  but  an  agreement  to  suspend  opera- 
tions and  close  up  the  affairs  of  the  company  is  not  in  any  fair 

»  Cook  Stock,  etc.,  sec.  63S.  »  North  v.  State,  107  Ind.  356. 

•Commonwealth     V.     Cullen,   13  '  Building  Association  vs.  Kelley, 

Pa.  St.  18;  St.  Loui«,  etc,  Association  1  Kulp,  9.    A  majority  cannot  force 

V.  Augustin,  2  Mo.  App.  123.  the  rest  against  their  will  to  wind  up 

*  Kansas  City,  etc.,  Company  v.  before  the  time  of  maturity.  So 
Sauer,  65  Mo ,  279.  held  in  a  case  where  borrowers  tried 

*  Folger  v.  Columbian,  etc.,  Com-  to  compel  non-borrowers  to  accept 
pany.,  9(5  Am.  Dec.  757,  note.  a    sum    per    share    less    than    the 

*  Valley  Bank,  etc.  Institution  v.  amount  fixed  by  charter;  Pf ;ifi  v. 
Sewing  Society,  28  Kan.  423.  Building  Association,   6  W.  N.  O. 

*  Bo>ton,  etc..  Company  v.  Lang-  349. 
don,  24  Pick.  49. 


120  BUIi^DING    ASSOCIATIONS. 

sense,  either  a  present  forfeiting  or  laying  down  of  the  franchises 
or  corporate  rights  of  the  association.*  If  the  members  unani- 
mously agree  to  cease  business  before  maturity  of  the  stock, 
the  assets  should  be  reduced  to  a  distributive  basis.  The  non- 
borrowing  members  should  pay  their  dues  to  the  date  of  dis- 
solution as  should  the  borrowing  members,  while  the  latter 
should  repay  their  loans,  less  the  surrender  value  of  their 
stock,  if  they  choose  to  so  apply  it.*  Unless  there  has  been  an 
intention  to  dissolve  the  corporation,  accompanied  by  the  sur- 
render of  the  charter,  the  association  will  not  by  this  distribu- 
tion of  assets,  be  considered  defunct  so  far  as  its  chartered 
existence  is  concerned.  Sometimes,  the  association  in  times 
of  depression  or  misfortune,  may  determine  to  suspend  until 
its  condition  is  determined,  and  this  the  members  may  do;  but 
a  borrower  is  not  thereby  relieved  from  the  payment  of  inter- 
est on  the  loan  during  the  suspension.^ 

Sec.  5.  Eifect  of  Appointment  of  a  Receiver. 
However,  when  the  association  goes  into  the  hands  of  a 
receiver,  the  borrower  is  not  chargeable  with  weekly  dues  and 
interest,  for  this  is  equivalent  to  a  dissolution  as  to  him"* 

The  appointment  of  a  receiver  to  wind  up  the  associa- 
tion and  distribute  its  assets,  operates  as  a  discontinuance  of 

'  City  Loan    etc.  Association    v.  ment  made  by  the  mortL'^agor,  ac- 

Goodrich,  48  Ga.  445.  cording  to  the  rule  applicable  to 

s  The    following    holding    as    to  an   account    between    debtor    and 

computation  was  made  in  a  Mary-  creditor;  Hempstead,  etc.,  v.  King, 

land  case:  58  Md.  271). 

When  the   affairs  of  a  building  "Thomson  v.  Ocmulgee,  etc.,   As- 

association  are  in  course  of  liquida-  sociation,  50  Ga.  350. 

tion   the  original  purposes  having  ^Peter's  etc  Association  v  Jaecksch, 

been  abandoned  by  mutual  consent  51  Md.,  108;  Bowker  v.  Mill  River 

the  proper  mode  of  stating  an  ac  etc.,  Association,  7  Allen,  100;  Cook 

count  between  such  association  and  "^^  Kent  105  Mass.,  24^^ ;  In  Hinman 

a  shareholder  who  has  obtained  ad-  v.  Kyan  3  C.  C  (Ohio)  529,  it  was  held 

vance  on  his  shares  of  stock,  on  a  that  while  the  dues  stop,  the  mort- 

mort<racre,  is  to  charge  the  mort<rag.  ga.se  remains  in  force,  and  interest 

or  whh'the  sum  actually  advanced  continues.     As  to  the  continuance 

to  him  by  the  association,  and  inter-  "f  interest,  the  court  took   a  diffe- 

est  thereon  at  the  rate  of  six  per  rent  view.     See  also  Hekelnkaem- 

...  ,*u    1       1  >„»«\  ^^^  or,„,Tm  Aa        per  V.  German,  etc.  Association,  23 
cent,  (the  legal  rate)  per  annum,  ae-       '  ' 

ducting  from  time  to  time,  the  pay-       Kans.  549. 


FINAL    SETTLEMENT    WITH   MEMBERS.  121 

all  future  payments;  or,  if  the  association  be  notactnally  dis- 
solved, if  there  can  be  no  chance  of  paying  the  unredeemed 
8hares  their  par  value,  and  the  association  be  unable  to  carry 
out  its  contract  with  the  mortgagor,  so  as  to  enable  him  to  get 
a  release  of  the  mortgage,  according  to  the  terms  of  its  cove- 
nants, then  tlie  contract  as  originally  contemplated  is  termi- 
nated, and  the  mortgagor  occupies  the  same  position  as  if  the 
association  were  dissolved' 

Sec.  G.  Final  Settlement  with  Members  and 
Creditors.  Final  division  and  distribution  of  the  assets  of 
the  association  are  required  to  be  made  when  the  accumulated 
fund  is  sufficient  to  pay  the  par  value  of  the  shares  after  the 
payment  of  all  debts  and  liabilities  of  the  association.'  The 
shareholders  must  wait  until  the  debts  and  liabilities  are  dis- 
charged before  taking  the  assets.  Any  agreement  for  a  con- 
trary arrangement  will  be  held  void  by  the  courts  as  to  credi- 
tors.3  Unless  the  association  has  distributed  all  pf  its  assets 
and  matured  all  of  its  stock,  there  is  no  dissolution  of  the 
corporation,  merely  a  termination  of  the  membership  of  those 
holding  cancelled  and  retired  stock.  In  the  old  societies  issuing 
but  one  series,  or  all  of  their  stock  at  one  time,  there  was  no 
settlement  with  the  members  until  dissolution,  but  under  the 
plan  of  associations  as  existing  in  the  United  States,  they 
issue  stock  in  series,  one  after  the  other,  or  as  it  is  applied  for, 
so  that  the  effect  is  to  continue  the  existence  of  the  association. 
Whenever  the  payments  on  stock,  together  with  its  pro  rata 
share  of  profits  above  debts,  equal  its  face,  the  association 
is  bound  to  retire  it,  and  thereupon  the  association  sets 
to  work  to  retire  the  next  issue  and  so  on.  If  the  stock  is 
issued  in  classes  or  series,  the  entire  series  is  retired;  if  it  is 
issued  at  different  times,  as  in  the  permanent,  each  issue  is 
retired  separately.  In  the  former,  the  profits  are  credited  to 
each  series  on  the  books  of  the  association,  as  it  may  be  entitled 
to  them,  and  in  the  latter,  the  profits  are  credited  each  divi- 

'Hampstead,  etc.,  Association  v.  'White  v.  Mechanics  etc.,  Associa- 

King,  5»  Md.  279 ;   Windsor  v.  Ban-  tion,  22  Grat.  26d. 

del,  40   Md.  17'3 ;  Low   Street,   etc.,  'ileg,s;ie  v.  Building  Association, 

Association,  v.  Zucker,  4S  Md.  448.  107  N.  C  581. 


122  BUILDING    ASSOCIATIONS. 

dend  day,  on  the  member's  stock,  in  his  pass  book.  "When  the 
maturity  is  reached  in  the  serial,  it  is  determined  by  a  division 
of  the  profits,  attaching  to  that  series,  by  the  total  number  of 
shares  in  the  series,  and  in  the  permanent,  it  determines  itself 
by  adding  together  the  payments  and  credited  dividends.  If 
in  its  computation,  the  association  made  an  error  in  extin- 
guishing stock,  the  shareholder  may  maintain  a  bill  in  equity 
to  correct  the  error,'  or,  if  the  association  made  a  settlement 
contrary  to  its  constitution,  by  which  a  stockholder  received 
more  than  bis  share,  he  may  be  made  a  party  to  a  bill  in 
equity,  for  the  purpose  of  having  all  questions  arising  in  the 
transaction  adjudicated,  one  of  which  is  their  liability  to  refund 
such  excessive  amount,'  and  though  such  settlement  is  in  good 
faith,  the  overpaid  members  will  not  be  released,  where  it  turns 
out  that  there  will  be  a  deficiency  as  to  non-retiring  members.* 
In  assuming  a  basis  for  the  distribution  of  its  earnings,  the 
association  should  not  regard  so  much  the  time  of  its  issue  of 
stock,  or  its  series,  as  the  amount  of  dues  received  on  the  stock.* 
The  association  has  been  able  to  realize  a  profit  on  account  of 
money  paid  into  its  treasury  by  the  members,  and  the  profits 
thereon  justly  attach  to  those  paying.  If  a  member  is  delin- 
quent in  his  payments  for  a  short  period,  and  the  association 
is  compensated  for  such  delinquency  by  the  fines,  the  mem- 
ber's share  of  profits  should  attach  notwithstanding,  but  if  the 
default  is  long,  without  any  prospect  of  removal,  the  association 
should  in  its  by-laws  provide  for  some  disposition  of  such 
stock.  It  may  be  by  forfeiting  it  after  a  long  continued 
default,  but  the  more  equitable  method  is  to  retire  it,  and  after 
deducting  the  proper  charges,  place  it  at  the  member's  disposal 
in  the  treasury.  The  association  has  been,  in  this  way,  pro- 
tected and  receives  the  use  of  the  money. 

Sec.  7.  Settlement  Before  Maturity.  The  mem- 
bers may  agree  unanimously  to  wind  up  the  association,  before 
maturity  of  the  stock,  and  any  fair  and  equitable  agreement 

'Building    Association's  Appeal,  ^jyicj^pown   v.   Building  Associa- 

33  P  L.  J.  324.  tion,  5  Bull.  52. 

'Goodrich  v.   City,  etc.,   Associa-  ^Seibel  v.  Building  Association, 

tion,  54  Ga.,  98.  43  Ohio  St.,  371. 


APPOINTMENT    OF    RECEIVER.  123 

made  between  tlieiii,  as  to  the  mode  of  settlement  and  dissolu- 
tion, will  be  upheld.  Thus,  an  agreement  to  wind  up  an  asso- 
ciation by  paying  the  owners  of  the  unredeemed  shares  the 
sums  they  had  advanced,  with  interest,  and  that  the  owners  of 
the  redeemed  shares  who  had  given  mortgages  for  the  price  of 
the  redemption,  should  be  discharged  upon  paying  the  amount 
of  their  mortgages  with  interest,  was  held  valid  and  enforce- 
able" 

In  order  to  make  any  such  agreement  valid,  there  are  two 
cardinal  points  to  be  observed,  to-wit:  The  discharge  of  all 
of  the  society's  debts  and,  the  equal  distribution  of  all  the 
remaining  profits  among  the  stockholders,  according  to  their 
stock- holdings. 

Sec.  8.  Assig^iiment  for  Creditors.  When  a  build- 
ing association  has  become  insolvent,  it  has  been  held  in 
Pennsylvania,  it  may  make  an  assignment  for  the  benetit  of 
its  general  creditors,"  but  not  for  the  benefit  of  its  members,* 
but  if  an  assignment  has  been  made  for  general  creditors,  the 
treasurer  of  the  association  is  entitled  to  be  reimbursed  as  a 
general  creditor,  for  moneys  paid  by  him  on  orders  drawn 
before  the  assignment,  in  priority  to  the  claim  of  withdrawing 
stockholders.*  The  fact,  that  an  association  has  made  an 
assignment  for  the  benetit  of  creditors  does  not  prevent  the 
recovery  of  a  judgment  against  it.s  The  usual  method  is  for 
a  receiver  to  be  appointed  for  an  insolvent  association,  and  the 
rights  of  creditors  and  members  are  protected  and  adjusted 
through  the  receivership. 

Sec.  9.  Appointment  of  Receiver  and  Winding- 
up,  In  regard  to  the  appointment  of  a  receiver,  it  is  under 
the  control  of  the  statutes  of  the  state,  and,  to  some  extent, 
within  the  discretion  of  the  court,  considering  the  application 
for  the  receiver.  Insolvency  of  an  association  is  seldom,  and 
so  rarely  do  the  assets  shrink,  so  that  creditors  are  unable  to 


'Hoboken,  etc..    Association    v.  'lb. 

Martin,  2  Beas.,  428.  *Christ5an'sAppea1,102Pa.St..l84. 

'/«  re  Estate  National,  etc.,  Asso-  'Connolly  v. Building  Association, 

ciation,  9  W.  N.  C,  79.  6  W.  N.  C  HtJ. 


124  BUILDING    ASSOCIATIONS. 

enforce  their  claims  without  a  receiver,  that  the  courts  have 
not  often  been  called  upon  to  exercise  that  authority. 

A  member,  when  he  believes  the  assets  are  sufficient  to  dis- 
charge the  stock,  may  invoke  the  aid  of  a  court  of  equity  to 
compel  a  settlement,  if  it  is  established  one  should  be  made. 
But  in  order  to  have  the  right  of  such  aid,  the  petitioner 
must  be  a  full  member  and  not  a  creditor.' 

Sec.  10.  Marshalling'  of  Assets.  When  there  is  in- 
solvency and  dissolution,  the  adjustment  of  the  rights  of  bor- 
rowers, non-borrowers  and  creditors,  becomes  a  question  of 
nicety  and  importance.  Equity  must  be  done  to  all,'  and  this 
is  true,  no  matter  what  preferences  as  to  payment  are  made  by 
the  charter  and  by  laws  among  different  classes  of  stockhold- 
ers.* If  the  parties  unanimously  agree  upon  an  equitable  set- 
tlement upon  dissolution,  it  will  be  upheld  in  a  court  of 
equity.* 

The  rights  of  the  different  classes  will  be  considered  in  the 
invene  order  as  stated. 

The  creditors,  whether  lien  holders  or  general,  are  entitled 
to  be  first  paid  in  full,  before  any  distribution  is  made  to  the 
stockholders.  And,  while  payments  on  stock  are  not  consid- 
ered, ipso  facto,  payments  on  mortgages,  to  such  an  extent  that 
any  one  except  the  parties  can  make  such  application  of  them 
yet  the  rule  is  varied,  so  a  junior  mortgagee  may,  in  equity 
compel  the  association,  as  holder  of  the  lirst  mortgage,  to  resort 
first  to  stock  held  by  it  as  collateral  security,  before  enforcing 
the  mortgage  lien,'  and  the  association  must  sell  the  stock  or 
retire  it,  in  either  case  crediting  the  proceeds  or  value  on  the 
debt.  The  association  h.as  the  right  to  sell  or  apply  this  stock 
on  the  mortgage  debt,  as  against  any  subsequent  purchaser  of 


'Lister  v.  Log  Cabin,   etc.,  Asso-  'Criswell's   Appeal,   100    Pa.  St. 

ciation,  38  Md.  115;  Edelin  v.  Pas-  488. 

coe,  2i  Grat.  826.  'Goodrich  v.   City,  etc.,    Associa- 

'^Bowker  v.  Mill  River,  etc..  As-  tion,  54  Ga.  98. 

Bociation,  7  Allen,  100.  ^Herbert  v.  Mechanics,  etc.,  As- 

'Strohen  v.  Association,    115  Pa.  sociation,  2  C.  E.  Gr.  497. 
St.  273. 


APPOINTMENT    OF    RECEIVER.  125 

the  stock.     He  takes  it  subject  to  the  lien  and  cannot  prevent 
its  enforcement.' 

Giving  the  junior  mortgagee  the  right  to  compel  the  asso- 
ciation, as  a  first  mortgagee,  to  resort  to  collateral  security,  in 
the  shape  of  stock,  before  reaching  the  land  held  as  common 
security,  is  but  an  expression  of  the  equity  rule,  that  if  one 
party  has  a  lien  on,  or  interest  in,  two  funds  for  a  debt,  and 
another  party  has  a  lien  on,  or  interest  in  one  only,  of  the 
funds,  for  another  debt,  the  latter  has  the  right,  in  equity,  to 
compel  the  former  to  exhaust  the  other  fund  in  the  first  instance 
for  satisfaction,  if  that  course  is  necessary,  for  the  satisfaction 
of  the  claims  of  both  parties,  whenever  it  will  not  trench  upon 
the  rights,  or  operate  to  the  prejudice  of  the  party  entitled  to 
the  double  fund.' 

"While  this  right  of  the  junior  mortgagee  would  more  often 
be  called  into  exercise  in  foreclosure  proceedings,  it  is  likely 
in  any  settlement  of  the  corporate  affairs  where  the  security  is 
of  questionable  sufficiency  for  all  liens. 

In  the  event  of  the  application  of  stock  payments,  under 
such  circumstances,  to  the  mortgage  debt,  the  simplest  manner 
is  for  the  association  to  give  the  borrower  credit  on  his  debt  to 
the  amount  of  the  withdrawal  value  of  his  stock.  But  the 
right  to  require  application  of  stock  does  not  extend  to  a  iudg- 


'Weiss's  Appeal,  5  W.  N.  C.  (Pa.)  able,    etc..     Association,    33   P.   F. 

423     It  would  seem  upon  principle  Smith  830;  Kremer  v.  Springfield, 

that  when  the   mortgagor   sold   his  etc..   Association,   6  W.N.  C.  267; 

stock  as  against  him,  the  assignee  Association  v.  Wall,    7   Phil  a.  240; 

could  compel  the  association  to  first  Kingsessing,    etc.,     Association    v 

restart  to  the  mortgage  before  re-  Roan,  9  W.  N.  C.  15;  North  Ameri- 

sorting  to  the  stock.  ca,  etc  ,  Association  v.  Sutton,  35  Pa. 

'Redbank,  etc..  Association  V.Pat-  St.  4G3;  Spring  Garden,  etc.,  Asso- 

terson,  12  C  E.  Gr.  223;  Washing-  elation  v.  Tradesmen's,  etc.,  Associa- 

ton,  eic,  Association  v.  Beaghen,  13  tion,  46  Pa.  St.  493;  Link  v.   Ger- 

C  E.  Gr.  98.     Contra:     Economy,  mantown,  etc.,  Association,  89  Pa. 

etc.,  Associaticm  v.  Hungerbuehler,  St.  15.    The  Pennsylvania  cases  are 

93  Pa.  St.  258 ;  Springville,  etc.,  As-  out  of  harmony  with   other  courts 

Bociation    v.   Raber,   33   Leg.     Int.  and    conflict    with,     principles    of 

329;  Building  Association  v.  Eshel-  equity, 
bach,  7  Phila.  189 ;  Selden  v.  Keli- 


126 


BUILDING    ASSOCIATIONS. 


ment  creditor.'  "WTien  the  rights  of  a  second  mortgagee  and 
the  assignee  of  stock  must  be  adjusted,  the  doctrine  of  mar- 
shalling assets  applies,  and  the  repayments  by  the  mortgagor 
to  the  society  must  be  apportioned  ratably  between  the  mort- 
gaged property  and  the  stock.'  But  the  doctrine  will  not  be 
applied  in  any  case  where  third  parties,  over  whom  the  person 
seeking  benefit  of  the  doctrine  has  no  superior  equity,  will  be 
injured.*  Any  subsequent  incumbrancer  to  compel  the  asso- 
ciation to  make  the  application  of  stock  payments,  must 
notify  it  of  his  claim,*  and,  unless  so  notified,  the  association 
will  not,  by  releasing  one  of  its  funds,  prejudice  its  right  as  to 
the  other.'  The  recording  of  a  subsequent  encumbrance,  is 
not  notice,"  but  where  there  was  actual  notice  of  a  subsequent 
morto-asre,  and  the  association  released  stock  held  as  collateral 
security,  its  mortgage  was  deemed  satisfied  to  the  extent  of 
the  stock  as  against  the  second  mortgage.^ 

In  the  event  of  insolvency,  or  dissolution  of  the  association, 
the  creditors  must  be  paid  in  full,  or  the  assets  exhausted,' 
before  the  rights  of  the  members  to  participate  can  be  exer- 
cised. 


'Herbert  v.  Mechanic's,  etc.,  As- 
Bociation,  2  C.  E.  Gr.  497. 

»Moxon  V.  Berkeley,  etc.,  Society 
59  L.  J.  Ch.  524. 

'Reilly  v.  Mayer,  1  Beas.  (N.  J.) 
55. 

*Uniontown,  etc., Association's  Ap- 
peal, 92  Pa.,  St.  200. 

»Quakertown,  etc.,  Association  v. 
Sorver,  33  Leg.  Int. (Pa),  359;  Patty 
V.  Pease,  8  Paige,  277 ;  Stnyvesant  v. 
Hone,  ISandf.  (N.Y.),419;  Cheese- 
brough  V.  Millard,  1  Johns  Ch. 
409. 

«Ib. 

'  "Washington,  etc  Association  v. 
Beaghen,  12  C.  E.  Gr.  98. 

*  Mortgages  of  advanced  mem- 
bers, it  has  been  held,  cannot  be 
treated  as  assets  for  the  purpose  of 
paying  the  liabilities  of  the  associa- 


tion. The  revenue  from  them  is  an 
available  asset.  This  revenue,  with 
other  revenues  of  the  association, 
creates  the  assets,  the  common  fund 
which  is  used  to  pay  off  the  stock 
of  all  shareholders:  Lister  v.  Log 
Cabin,  etc..  Association,  38  Md.  115. 
It  seems  to  the  writer  that,  in  a 
sense,  a  mortgage  to  the  extent  of 
the  amount  due  thereon  is  an  asset. 
It  represents  a  part  of  the  accumu- 
lations of  the  society,  in  fact  it  is  a 
loan  and  subsisting  debt  in  the 
society's  favor.  Until  application  is 
made  of  stock  payments,  it  is  a  debt 
for  the  full  amount.  It  is  not  an 
available  asset  however,  so  long  as 
the  mortgage  contract  is  in  force. 
In  case  of  insolvency,  the  amount 
due  on  the  mortgage  is  available  as 
a  paying  or  distributing  asset. 


LIABILITY    OF    BORROWER    FOR    DEBTS.  127 

Sec.  11.  Liiability  of  Stockholders.  If  the  assets 
do  not  pay  out  the  debts  to  outsiders,  the  etockholders  must 
respond  to  the  extent  of  the  deficiency,  and  the  limit  of  their 
iability  is  the  amount  of  their  stockholding.  Building  asso- 
ciation stock,  just  as  stock  in  any  other  corporation,  must  be 
paid  for,  and  the  distinguishing  difference  between  it  and 
other  corporations,  is  the  manner  of  payment.  The  building 
association  undertakes  to  make  a  profit  by  use  of  its  accumu- 
lations, to  be  applied  in  reduction  of  the  inember's  subscrip- 
tion. It  requires  partial  payments  up  to  the  period  when 
these  profits  upon  a  pro  rata  division  among  the  membera 
will  make  the  stock  worth  face.  The  stock  is  then  paid  for. 
If  it  contracts  debts  in  excess  of  the  earnings  and  stock  pay- 
ments, the  receiver,  just  as  in  ordinary  corporations,  would  bo 
entitled  to  enforce  2^ prorata  assessment  against  each  member 
to  cover  the  debt.  The  assessment,  so  long  as  it  did  not  exceed 
the  amount  of  the  association's  assets,  would  only  have  the 
effect  of  postponing  so  long  the  maturity  of  the  stock,  but  if  it 
exceeded  the  assets,  then  each  member  would  be  liable  to  an 
assessment,  not  exceeding  an  amount  equal  to  the  difference 
between  his  dues  paid  in  and  the  amount  of  stock  held  by 
him. 

In  distributing  the  assets  or  in  assessing  liabilities,  there  is  no 
distinction  between  investor  and  borrower,  so  far  as  their  stock 
is  concerned.  "Whatever  profits  accrue  to  the  investor's  stock, 
attach  in  the  same  proportion  to.  the  borrower's  stock.  If  the 
society  dissolves  before  maturity,  the  investor  is  relieved  from 
further  payments  and  this  is  true  of  the  borrower.  The 
association  has  placed  itself  beyond  the  power  of  perform- 
ing its  part  of  the  contract,  and  the  courts  will  not  require 
either  class  of  shareliolders  to  longer  perform  their  agree- 
ments. 

Sec.  12.  IJability  of  Borrower  for  Debts.  But  this 
does  not  release  the  borrower  from  the  payment  of  his  debt 
The  association  settles  with  theinvestor  by  paying  him  the  value 
of  his  stock;  it  settles  with  the  borrower  by  collecting  the 
amount  of  the  loan,  less  the  value  of  his  stock.  In  the  event] 
of  loss,  the  borrower  must  bear  his  proportion  with  the  in- 


128 


BUILDING  ASSOCIATIONS. 


vestor.'  This  is  the  rule  established  by  the  American  cases,  bat 
in  Eiiirland,  it  is  held  the  borrower  cannot  be  held  to  that  iia- 
bility/  unless  the  rules  imposed  it.* 

Sec.  13.  No  Liabilities  for  Losses  under  the 
3Iortg'age.  The  liability  against  the  borrower  for  losses,  a& 
has  been  stated,  is  a  personal  one,  just  as  that  of  the  investor 
is,  and  cannot  be  enforced  against  the  mortgaged  property, 
unless  the  mortgage  clearly  includes  it.  So,  that  when  the 
mortgagor  has  paid  off  his  mortgage,  he  is  entitled  to  have  it 
released,  although  he  may  be  liable  for  debts  of  the  associa- 
tion. His  personal  liability  continues.  That  is  a  matter  aris- 
ing out  of  his  stock  transaction  and  an  entirely  separate  con- 
tract. 

Sec.  14.  Liability  of  Withdrawing  Member. 
When  a  member  gives  notice  of  withdrawal,  his  membership 
ceases  and  he  is  creditor  of  the  association,  so  that  he  cannot 
be  held  to  losses  from  bad  investments  made  after  he  with- 
drew.* But  if  any  shareholder  has  been  illegally  released,  as 
by  receiving  an  amount  which  should  have  been  subject  to  a 
loss,  his  liability  can  be  enforced  in  a  proceeding  to  wind  up, 
by  making  him  a  party.* 


'  Hinmin  v.  Ryan,  3  0.  C  (Ohio) 
529;  Edelinv.  Pascoe,  23  Grat.  8i(3; 
Windsor  v.  Bandel,  40  Md.  173; 
Stroliea  v.  Franklin,  etc,  Associa- 
tion, 115  Pa.  St.  273;  Laurel  Run, 
etc.  Association  v.  Sperrins;,  106  Pa. 
St.  334;  Booz's  Appeal,  16  W.  N.  C. 
865;  People  v.  Lowe,  117  N.  Y.  175 
reversing  47  Hun,  577.  In  the  117 
N.  Y.  case,  it  was  held  that  each 
member  for  each  share  held  by  him 
was  entitled  to  the  same  amount,  i.  e., 
a  proportionate  share  of  the  assets,  if 
a  debtor,  and  if  he  owed  more  than 
his  distributive  share,  he  was  bound 
to  pay  the  balance  and  upon  such 
payment  was  entitled  to  a  di.-^charge 
of  his  mortgage;  see  also,  Everman 
V.  Schmitt,"24  Bull.  (Ohio)  50;  i\Ic- 
Grath  v.  Hamilton,  etc..  Association, 


44  Pa.  St.  883 ;  Knobiauck  v.  Robert 
Blum,  etc,  Association,  25  Pitts  L. 
J.  O.  S.  39;  Wittman  v.  Building 
Association,  7W.  N.C.  8U;'Seibel  v. 
Building  Association,  43  Ohio  St. 
371. 

'  Buckle  V.  Lordonny,  56  L.  J. 
Ch.  437 ;  Brownlie  v.  Russell,  L  R.,  8 
App.  Cas.  235 ;  Tosh  v.North  British, 
etc.,  Society  L.  R.,  11  App  Cas  489. 

'  Rosenberg  vs.  Northumber- 
land, etc..  Society,  LR.,  22  Q  B.373, 
But  see  the  case  of  In  re  "West  Rid- 
ing society,  L.  R ,  43  Ch.  Div.  407, 
where  it  was  held  that  borrowers 
and  non-borrowers  must  contribute 
equally  to  losses. 

*  Christian's  Appeal,  102  Pa.  St. 
184. 

«  Cason  vs.  Seldner,  77  Va.  293. 


CONSOLIDATION    OF    ASSOCIATIONS.  129 

Sec.  15.  Assets  to  be  Distributed  Amoiij?  Bor- 
rowers and  Non -Borrowers  Alike.  After  the  credi- 
tors are  satisfied,  or  if  there  be  none,  and  the  payment  of  all 
expenses,  the  method  of  distribution  of  the  assets  of  an  asso- 
ciation, solvent  or  insolvent,  is  to  pro  rate  them  among  the 
shareliolders,  borrowers  and  non-borrowers  alike.  If  the  asso- 
ciation is  insolvent  and  the  winding  up  is  voluntary  or  invol- 
untary, 80  that  the  distribution  will  not  mature  the  stock  and 
discharge  the  mortgages,  the  payment  of  the  difference  may 
be  enforced  ao^ainst  the  morto:a"ors  and  the  sum  thus  realized 
passes  to  the  common  fund  for  like  distribution.  Confusion 
will  be  avoided  in  these  matters,  by  holding  fast  to  the  fact 
that  the  borrowing  has  no  effect  on  the  membership  of  the 
borrower,  and  its  only  effect  upon  his  stock,  is  to  subject  it  to 
a  collateral  lien.  The  debt  remains  in  law  undiminished, 
although  the  stock  may  have  reached  maturity,  and  then  the 
member  of  the  association  has  the  privilege  of  applying  it  in 
satisfaction  of  the  debt.  Until  such  application  is  made,  it 
remains  in  full  force,  unaffected,  except  by  the  lien,  and  it  is 
subject  to  all  liabilities  and  rights  accorded  any  other  stock. 

Sec.  16.  Consolidation  of  Associations.  It  some- 
times happens,  in  the  management  of  associations,  that  by 
union  of  their  interests,  two  associations  can  accomplish  more 
than  either  can  do  singly.  But  how  to  unite  their  interests 
when  it  is  wise,  is  a  question  of  some  difficulty.  Without 
legislative  authority,  they  have  no  power  to  consolidate,  and 
if  they  had  such  power,  the  actual  union  would  be  full  of 
unadjustable  points.  The  clearest  way  is  for  the  stockholders 
of  one  association  to  unanimously  agree  to  dissolve.  This 
right  is  vested  in  them.'  The  manner  of  dissolving  should  be 
by  agreement  to  that  effect  signed  by  each  stockholder,  and  a 
resolution  duly  entered  on  the  minutes  record  of  the  associa- 
tion reciting  that  as  it  is  the  expression  and  consent  of  each 
stockholder  that  the  corporation  dissolve,  such  action  be  taken, 
and  that  the  value  of  the  assets   of  the   association  be  ascer- 

'Barton  v.  Enterprise,  etc.,  Asso- 
ciation.  lU  Ind.,  220. 


130 


BUILDING  ASSOCIATIONS 


tained,  and  a  pro  rata  distribution  thereof  liad.  If  there  are 
borrowers,  their  debts  should  be  repaid  and  such  repayment 
should  go  into  the  common  fund.  The  assets  realized  from 
the  various  sources  are  then  divided  up  among  all  the  mem- 
bers J9r6>  r<2to,  and  the  society  is  dissolved.  This  is  the  way  it 
is  done  theoretically,  but  in  case  of  practical  amalgamation,  the 
surviving  society  receives  the  applications  of  the  borrowing 
members  of  the  other  society,  for  loans  in  amount  as  held  by 
them  in  such  society,  and  if  the  security  and  titles  are  satis- 
factory, the  surviving  society  grants  loans  upon  the  properties 
in  the  full  amount  as  theretofore  held,  and  then  ascertains  the 
value  of  the  stock  of  such  society,  and  issues  stock  to  all  the 
members  of  the  old  society,  according  to  their  old  holdings, 
entering  credits  on  their  passbooks  as  entered  by  the  old 
society,  and  the  stockholders  become  members  of  the  surviving 
association.  The  absorption  is  then  complete.  A  serial  may 
be  changed  into  a  permanent,  or  vice  versa,  by  the  unanimous 
action  of  the  stockholders.  If  a  serial  is  changed  to  a  perma- 
nent, the  only  changes  to  be  made  would  be  to  issue  stock  at 
any  time,  instead  of  in  classes,  and  then  to  credit  upon  the  pass 
books  the  profits  of  the  entire  preceding  time,  or  in  other 
words,  divide  the  profits  after  all  proper  deductions  as  expen- 
ses, the  amount  carried  to  the  reserve  fund  and  other  charges. 
Thereafter,  the  profits  are  divided  up  every  six  months  and 
stock  is  issued  at  any  time.  These  are  the  two  important 
distinguishing  characteristics  of  the  permanent.  It  virtually 
makes  a  division  of  profits  every  six  months,  or  annually, 
instead  of  at  the  maturity  of  the  stock  as  with  the  serial.  If 
the  change  is  from  the  permanent  to  the  serial,  the  profits 
credited  as  dividends  are  withdrawn  from  the  division  and 
lumped  in  the  treasury,  to  be  held  until  they  aggregate  suffi- 
cient to  pay  off  the  stock.  The  difficulty  in  this  part  of  the 
change  would  be  to  throw  the  separate  issues  of  stock  into 
different  classes.  It  could  only  be  done  if  some  of  the  issues 
were  near  enough  to  each  other  to  form  classes.  It  would  not 
matter  as  to  the  size  of  the  classes,  as  such  division  is  only  for 
convenience  of  issuing  stock,  and  does  not  create  an  indepen- 
dent and  distinct  part  of  the  association.      It  is  a  part  of  the 


> 


CONSOLIDATION    OF    ASSOCIATIONS.  131 

association  entitled  to  its  share  of  the  entire  profit.  If  the 
shares  issued  in  the  permanent  can  be  so  classified,  the  change 
is  then  easily  effected  as  indicated. 

If  permitted  by  statute,  the  association,  upon  paying  off 
stock,  may  provide  for  reissuing  the  same  as  new  stock. 
Thus,  when  a  share  is  paid  off,  a  new  certificate  therefor  may 
be  issued  to  a  new  member,  upon  his  entrance  into  the  asso- 
ciation- 


CHAPTER  Xm. 
PRACTICAL  EESULTS. 

Sfctton  1.     The  character  of  a         Section?.    Method  of  loans, 
building  association.  Sections.    Some  results. 

Section  1.  The  Character  of  a  Building  Associa- 
tion. Having  considered  the  building  association  in  various 
phases,  it  remains  to  look  at  its  results. 

The  simplicitj  and  comparative  certainty  of  the  scheme, 
inspire  contidence,  and  its  successful  growth  and  substantial 
achievements  have  enlisted  a  very  strong  support.  The  scheme 
is  simple,  as  a  proposition,  to  receive  and  loan  money  for  the 
common  profit  of  all  members,  and  to  return  the  receipts  with 
the  accumulations,  to  the  members,  whenever  they  reach  a 
certain  amount.  The  principle  of  co-operation  has  but 
received  another  application.  The  only  element  of  uncertain- 
ty in  its  business  is  in  its  securities.  Unless  they  are 
depressed  by  unforeseen  causes,  so  as  to  impair  them,  or  render 
them  worthless,  the  association  can  foretell  with  almost  mathe- 
matical accuracy  what  it  can  do.  And  whatever  would  affect  its 
securities,  consisting  of  real  estate,  would,  unless  it  were  some 
local  trouble,  disturb  directly  or  indirectly  all  securities.  The 
assets  of  the  association  are  in  the  hands  of  the  earning  classes 
of  the  land,  the  wageworkers,  who  are  contributing  daily  to 
the  substantial  and  material  wealth  of  the  country.  There  is 
no  element  of  speculation  or  hazard  to  be  considered,  as  in 
most  large  moneyed  interests.  The  successful  mastery  of  those 
elements  have  built  up  large  financial  institutions,  but  talents 

132 


METHOD    OF    LOANS.  133 

of  that  character  find  no  field  in  the  operations  of  building 
associations.  So  simply,  and  yet  so  certainly,  are  they  con- 
structed, that  they  almost  carry  themselves.  They  do  not  deal 
with  men  whose  financial  security  is  their  personal  responsi- 
bility, which  may  be  lost  in  a  day.  Whatever  financial  disa- 
ster closes  the  factories,  shops  and  stores,  and  stops  the  rail- 
roads, threatens  the  future  usefulness  of  the  associations,  but 
not  their  solvency,  so  long  as  real  estate  is  not  greatly 
depressed.  But  when  this  result  is  reached,  larger  but  less 
stable  securities  have  been  impaired  before  the  building  asso- 
ciation has  been  reached.  Besides  the  ordinary  security,  the 
association  has  bound  its  borrower  by  the  strong  tie  of  home 
interests.  A  member  will  give  his  best  energies  to  save  his 
home.  It  is  the  instinct  of  self  preservation.  All  hie  capital 
outside  of  his  home  may  be  involved,  his  note  in  bank  may 
be  protested  and  he  philosophically  regards  these  things  as 
culminations  of  misfortunes,  but  he  does  not  look  so  calmly 
upon  the  creditor  of  his  home.  The  building  association 
mortgage,  resting  upon  it,  is  protected,  if  possible.  With  the 
home  maker,  all  energies  bend  to  its  payment.  Thus,  it  be- 
comes apparent  why  the  building  association  is  prosperous 
and  secure. 

Sec.  2.  Method  of  Loans.  It  loans  its  money  upon 
first  mortgage  on  real  estate.  In  addition,  it  requires  the  bor- 
rower to  be  a  member,  to  take  an  active  interest  and  hold  stock. 
It  pledges  the  stock  as  additional  security  and  appeals  to  his 
sense  of  accumulation  by  offering  him  a  share  of  the  profits. 
The  borrower,  in  addition  to  interest,  pays  a  premium,  which 
generally  increases  the  interest  at  least  two  or  three  per  cent. 
This  would  seem  oppressive,  were  it  not  for  the  fact  that  he 
shares  in  all  the  profits,  which,  when  applied  on  the  debt, 
decrease  the  interest.  The  source  of  the  great  profit  to  asso- 
ciations, by  which  they  are  enabled  to  show  great  earnings, 
compared  with  other  money  lenders,  is  the  weekly  repay- 
ments. 

A  borrower  pays  in  a  certain  amount  each  week  or  month, 
as  the  case  may  be,  on  his  stock,  which  is  pledged.  These 
amounts  are  reloaned  at  once  and  are  being  repaid  in  the  same 


134  BUILDING  ASSOCIATIONS. 

manner,  and  so  on,  that  one  dollar  loaned  to  A,  is  partlj 
repaid  and  reloaned  to  B,  who  repays  part  of  it,  which  is 
loaned  to  0,  and  each  loan  is  earning  for  the  full  amount,  as 
no  credit  is  made  upon  repayment  to  stop  interest.  A  as  a  bor- 
rower has,  in  fact,  repaid  part  of  his  debt,  and  the  society  has 
reloaned  it  to  B  for  the  benefit  of  A  and  the  other  members. 
Thus,  money  by  this  method,  assumes  a  manifold  earning 
capacity,  attainable  nowhere  else.  The  burden  on  the  bor- 
rower is  not  heavy,  for  while  he  is  paying  interest  on  his  full 
debt  and  making  repayments,  those  repayments  are  earning  a 
good  profit  and  his  accumulations,  secured  in  this  way, are  mak- 
ing a  sure  sinking  fund  to  discharge  his  debt.  The  security 
of  the  association  is  thus  weekly  being  increased.  The  debt 
is  growing  gradually  smaller  by  the  weekly  repayments.  The 
borrower  has  obligated  himself  to  make  them  or  the  whole 
debt  becomes  due  and  collectible.  He  understands  this,  and 
that  by  his  payments  he  is  substituting  for  a  rent  cost,  on 
most  favorable  terms  to  himself. 

The  money  paid  in  as  dues,  as  it  accumulates  to  a  size 
large  enough,  is  at  once  loaned.  The  experience  of  associa- 
tions is  an  inability  to  supply  the  demand.  The  home-getters 
are  not  limited  to  any  particular  business  or  locality,  so  the 
field  of  building  associations  is,  almost,  as  wide  as  humanity 
itself.  So  long  as  other  businesses  thrive,  this  institution's 
operations   are  practically  unlimited. 

Several  methods  have  been  tried  in  loaning  money,  but  there 
are  three  generally  recognized  systems.  Nearly  all  associa- 
tions charge  a  premium  in  addition  to  interest.  In  some,  the 
premium  charge  is  deducted  from  the  face  of  the  loan  and 
interest  is  charged  on  the  full  amount.  Suppose  the  shares 
are  $200  each  and  the  member  owns  five  shares.  He  desires 
to  borrow  $1,000,  and  his  bid  is  25  per  cent.  The  association 
pays  to  him  $750  and  charges  him  interest  on  $1,000,  to  be 
paid  quarterly,'  and  takes  an  assignment  of  his  shares   as  col- 

'Whilfl  this  is  generally  done,  it  has 
been  held,  as  has  been  stated,  u.sur- 
ious.     See  pp.  104,  105. 


METHOD    OF   MAKING   LOANS.  135 

lateral  security,  besides  a  mortj^age  on  real  estate,  to  secure  all 
the  payments.  Some  associations  modify  this  plan  by  only 
charging  upon  the  amount  received  by  the  borrower.  The 
borrower  continues  his  payments  until  his  stock  has  matured, 
when  the  association  will  cancel  his  mortgage  and  retire  his 
stock,  by  applying  the  latter  to  the  former.  If  he  withdraws 
before  maturity,  a  per  cent  of  the  premium  is  refunded  to 
him.  Tliis  introduces  a  great  element  of  uncertainty  in  the 
association's  profits.  These  systems  of  loaning  are  practiced 
in  some  of  the  oldest  societies. 

In  Massachusetts,  building  associations  known  as  co-opera- 
tive banks,  may,  by  law,  provide  instead  of  bids  for  premium, 
a  rate  of  annual  interest  upon  the  sum  desired,  payable  in 
montlily  instalments.  In  New  York,  the  premium  is  charged 
as  a  bonus,  and  is  deducteJ  at  the  time  of  the  loan  without 
any  rebate  on  withdrawal.  Interest  is  charged  on  the  full 
amount. 

The  most  popular  and  prevailing  system  is  to  loan  the  mem- 
ber the  full  amount  of  each  share  held  by  him  and  make  the 
payment  of  premium  and  interest  in  instalments  with  the 
dues.  For  instance,  a  borrower  of  $i, 000  holding  five  shares 
of  $200  each,  bids  twelve  cents  premium  per  share  per  week. 
He  would  be  required  to  pay  with  his  dues  of  lifty  cents  on 
each  share,  a  premium  of  twelve  cents  and  interest.  If  the 
latter  were  six  per  cent  per  annum,  his  total  payments  would 
be,  dues  $2  50,  premium  60  cents,  interest  $1.20,  making  a 
total  weekly  payment  of  four  dollars  and  thirty  cents,  of 
which  one  dollar  and  eighty  cents  is  a  profit  to  the  association. 
The  other  $2.50  is  a  credit  on  his  stock  payments.  The  bor- 
rower on  this  basis  pays  9.3t)  per  cent  interest  for  the  first 
year,  but  on  his  payments  he  receives  a  profit.  Assuming 
that  the  association  is  receiving  on  an  average  the  same  pre- 
mium, and  is  able  to  make  an  annual  net  profit  of  8  per  cent, 
which  would  be  a  conservative  estimate,  the  borrower's  inter- 
est is  net  8.8Jr  per  cent  for  the  first  year  of  his  loan.  The 
method  of  the  computation  is:  He  pa)'s  to  the  association 
during  the  year  in  wei3kly  instalnlents  $180.  The  association 
has  the  use  of  all  of  it  for  half  the  time,  and  would,  therefore, 


136 


BUILDING  ASSOCIATIONS. 


pay  to  him  a  profit  of  .$5.20,  or  8  per  cent  on  $65.00.  The 
second  year,  bis  net  interest  would  be  7.8  per  cent;  the  third 
year,  6.7  per  cent;  the  fourth  year,  5.72  per  cent;  the  fifth 
year,  4.68  per  cent;  the  sixth  and  last  year,  3.64,  or  an  average 
of  6.23  per  cent  for  the  whole  time.  During  that  time  be  has 
paid  in  $780,  which,  with  his  dividends,  will  mature  bis  stock 
calling  for  $1,000.  The  amount  he  has  paid  weekly  exceeds 
but  slightly  the  rent  cost,  and  he  is  thus  enabled  to  discharge 
a  debt  he  probably  never  could  have  met  if  he  had  to  pay  it 
all  at  one  time.  By  distributing  the  payments  over  a  series 
of  years,  the  borrower  is  able  by  constant  and  successive  efforts 
to  dispose  of  a  task,  that  were  he  to  confront  at  one  time  would 
render  him  discouraged  and  hopeless.  If  he  were  to  discharge 
the  entire  debt  at  one  time  in  the  future,  its  maturity  would 
find  him  as  unprepared  as  when  it  was  contracted.  The  build- 
ing association  marshals  his  forces  for  him  and  conducts  him 
through  to  a  place  of  safety.  He  becomes  trained  in  his 
observance  of  its  laws,  and  he  is  regular  in  his  payments.  The 
association  has  involved  his  greater  interests  and  his  watchful 
and  persevering  thrift  strengthens  it. 

In  some  associations  the  premium  is  charged  as  a  whole 
and  divided  into  a  certain  number  of  instalments,  generally  as 
many  months  as  the  estimated  maturity  of  the  association,  and 
each  fixed  instalment  is  payable  each  month. 

There  is  still  another  manner  of  lendino;,  ori'^inatino'  with 
an  Ohio  association,  the  Dayton  Mutual  Home.  This  associa- 
tion has  many  imitators  throughout  the  country  and  has  itself 
achieved  wonderful  success.  The  shares  in  associations  of  this 
type  are  usually  $100  and  the  dues  are  25  cents  on  each  share. 
The  profits  are  distributed  semi-annually,  by  crediting  them  on 
the  pass-books  of  the  members.  Loans  are  made  upon  inter- 
est and  premium  payable  weekly.  The  chief  distinction 
between  it  and  other  associations  is  the  opportunity  of  a  mem- 
ber to  extend  the  time  of  repaying  his  loan  as  he  may  desire 
from  a  period  of  six  3'ears  to  approximately  fourteen  years. 
The  association  gives  him  the  privilege  of  paying  the  amount 
named  as  dues  only,  instead  of  adding  thereto  the  premium 
and  interest.     That  is,  if  his  interest  amounts  to  12  cents  per 


SOME    RESTTLTS.  137 

■week  and  his  premium  to  6  cent»  per  week,  18  cents  will  be 
deducted  from  the  25  cents  for  the  cost  of  the  loan,  and  the 
balance  will  be  credited  on  his  stock.  The  advantage 
to  the  member  is  that  he  can  regulate  his  payments  accord- 
ing to  his  income,  and  \n%y,  if  he  choose,  take  the  longest 
time,  about  11  years,  by  paying  only  the  amount  required  as 
dues. 

Sec.  3  Some  Results.  Building  associations  have 
become  enormous  accumulators  of  money.  Their  growth  is 
marvelous  and  attention  is  everywhere  attracted  to  them.  It 
is  safe  to  say  their  assets  exceed  the  combined  capital  stock  of 
the  National  banks  of  the  country.  Tlieir  profits  are  large  and 
.«afe.  People  who  have  not  investigated  them  are  surprised  at 
these  statements,  yet  the  facts  support  them.  To  give  some 
idea  of  the  workings  and  profits  of  associations  in  different 
states,  the  following  figures  collected  from  some  of  the  sssocia 
tions  will  serve: 

The  report  of  the  Ohio  state  inspector  of  building  associa- 
tions, just  issued,  states  that  there  are  465  associations  in  the 
state.  The  total  deposit  of  these  associations  on  December 
31,  1891,  aggregated  ^59,690,236.  Of  this  sum  $59,302,299 
has  been  invested  in  mortgages.  The  total  earnings  of  the 
associations  for  the  year  were  $2,905,755,  and  the  average  of 
dividends  declared,  was  6.88  per  cent.  The  total  member- 
ship in  the  state  is  233,100. 

One  of  the  largest  associations  in  the  country  is  the  Mutual 
Home  and  Savings  Association,  of  Dayton,  Ohio.  It  was 
organized  April  19,  1873,  with  an  authorized  capital  stock  of 
$10,000,000.  According  to  its  report  of  December  31,  1891, 
it  had  mortgage  loans  of  $1,489,980.26.  The  association 
earns  6  per  cent  interest  for  its  paid  ^lp  stockholders  and  7 
per  cent  for  its  running  shares.  It  has  had  $5,628,200  of  its 
capital  stock  subscribed,  and  now  has  $3,056,500  in  force,  the 
difference  having  been  retired  or  withdrawn. 

The  Equitable  Co-operative  Building  Association,  of  "Wash- 
ington, D.  C,  was  organized  in  1879,  and  its  total  receipts  to 
March  15,  1892,  were  $7,403,899.50,  with  assets,  October  15, 
1891,  of  $1,272,311.01  and  5,338  shareholders,  owning  15,371 


138  BUILDING    ASSOCIATIONS. 

shares.  The  association  has  had  but  two  foreclosures  since 
oro-anization,  without  any  losses.  It  has  matured  considerable 
stock  at  a  handsome  profit.  There  are  are  about  45  associa- 
tions in  the  District. 

The  Erie  Savings  and  Loan  Association,  of  Buffalo,  New 
York,  was  organized  in  ISS-t,  and,  at  the  close  of  December, 
1891,  its  receFpts  had  been  $1,276,193.67;  14,301  shares  are  in 
force,  held  bj  1,673  shareholders.  No  dividends  are 
declared,  the  stock  being  retired  as  it  is  matured.  Three 
series  have  been  paid  since  organization,  showing  a  large 
profit.  The  association  reports  assets  of  $162,133.35  to  mature 
the  other  13  series.  It  has  had  but  one  foreclosure  and  no 
losses.  The  Homestead  Savings  and  Loan  Association,  of 
Albany,  New  York,  incorporated  May  7,  1888,  has  assets  of 
$261,324.39  and  pays  six  per  cent  interest  on  paid  up  stock 
certificates.     The  other  members  receive  a  larger  per  cent. 

In  Pennsylvania,  there  are  invested  in  building  associations, 
upwards  of  $65,000,000,  and  the  outstanding  shares  number 
more  than  $1,000,000.  In  a  recent  report  of  secretaries  to  the 
Chicago  Building  Association  News,  and  the  Building  Asso- 
ciation and  Home  Journal,  of  Philadelphia,  the  folllowing 
profits  are  shown: 

Norris  Square,  Philadelphia 8         per  cent  per  annum. 

The  Phoenix,  " 9  "  " 

The  Solar,  «        112-3       "  « 

German  Central,  (2d)   "       6.22         «  « 

Allegany  Avenue,         "        10.76         "  « 

The  Daniel  O'Connel  "       14.38         «  " 

The  Lessing,  "        12.95        «  « 

Richmond  Mutual,        "       9.5  «  « 

West  End,  "       9.S4        «  « 

Carpet  and  Hosiery,      "        10.46         «  « 

Union,  McKeesport,  Pa.,      13.67        "  "    • 

North  Star,  Philadelphia,     11  "  " 

The  Republic,  "       10.5  '<  " 

The  Active,  "       8.15         «  « 

Ark,  "        7.96         « 

The  Ben  Franklin ,        "       7.57         '■'  "■ 


bOME    KESUI^TS.  139 

Energetic,       Philadelphia 11.23  per  cent  per  annum. 

Northern  National,       "       8.7G         "  " 

The  Joseph  B.Clausen,"        9.73         "  " 

Philadelphia,  «       8.5  "  « 

Model,  Roxborongh, Pa.,        9.58         "  "' 

In  New  Jersey  there  are  over  200  associaiicns,  avid  their 
average  profit  is  9.5  per  cent.  The  Artisans,  of  Camden, 
reported  net  assets  in  its  eighteenth  statement,  issued  in  May, 
1891,  of  $110,087.98.  Its  profits  are  9  per  cent  per  annum 
on  the  investment. 

Tennessee  Building  Associations  average  20  per  cent  profit. 
The  Tennessee  Mutual  Building  and  Loan  Association  isi 
one  of  the  leading  associations  in  the  state,  and  has  morto-ao-e 
loans  of  $50,000  as  the  result  of  one  year's  operations,  andi 
realized  a  profit  of  22.8  per  cent  on  the  total  capital  paid  in  to 
the  association. 

The  associations  in  Maryland  are  generally  good  and  work- 
ing very  successfully.  One  of  the  largest,  is  the  Provident' 
Building  Association  of  Baltimore,  which  was  organized  in| 
October,  1887.  Its  trial  balance  of  April  19,  1892,  showed  I 
assets  of  $562,255.47,  and  it  has  paid  6  per  cent  cash  each 
year  during  its  existence. 

Building  Associations  in  Massachusetts  are  known  as  Co- 
operative Banks,  and  number  about  110,  with  shares  in  force 
353,069,  and  49,441  members.  The  sum  of  $3,980,475,00' 
were  paid  in  last  year  as  dues,  and  the  net  profits  were  $G05,- 
129.09.  They  have  accumulated  assets  of  $11,874,530,14, 
representing  loans  on  real  estate  of  $10,791,168,02  and  cm 
shares  of  $520,800.67.  In  handling  their  loans,  they  have 
acquired  real  estate  by  foreclosure  of  $67,556,86.  They  have 
a  surplus  of  $41,314,44  and  a  guaranty  fund  of  $39,195,51. 
The  average  dividend  is  about  6.y  per  cent.' 

There  are  large  banks  in  Boston,  Maiden,  Worcester,  Camp 
bells,  Taunton  and  Fitchbury.      The  Guardian    Co-operative 
Bank  of  Boston  began   business   August  6th,    1886,  and  has 

The  figures  -vvpre  taken  from  Octo- 
ber last  report  by  the  state  inspector. 


140  BUILDING    ASSOCIATIONS. 

assets  of  $169,749.04.  The  Homestead,  began  September  12, 
1877,  and  ha3  assets  of  $333,172.82.  The  Pioneer  started 
Anp^nst  6,  1877,  and  has  assets  of  $355,112.74. 

The  Maiden  Co-operative  Bank  commenced  May  *9,  1887, 
and  has  assets  of  $126,580.67.  It  pays  7  per  cent  dividend 
and  has  never  had  any  losses  or  a  foreclosure. 

The  Equitable  Loan  Association,  of  Wilmington,  Delaware, 
was  organized  February  22,  1878,  and  has  assets  of  $183,- 
729.09.  Its  receipts  have  been  $191,510.46  and  it  Las 
matured  three  series.  Tlie  last  series  represented  a  profit  of 
of  $51.41  on  a  share  of  $200.00. 

In  Michigan,  the  associations  earn  about  20  per  cent  per 
annum  for  the  average  time.  The  Marquette  Buildino-  &  Loan 
Association,  organized  in  1889,  has  assets  in  the  sum  of  $118,- 
677.49  without  foreclosures  or  losses.  The  Northern  Michi- 
gan Building  and  Loan  Association  of  Hancock,  organized  in 
the  same  year,  has  assets  of  $131,116.05,  its  real  estate  loans 
consisting  of  $121,342.60. 

There  are  fifteen  associations  in  New  Hampshire,  and  their 
combined  assets,  $1,287,000.  They  have  about  13,500  mem- 
bers. The  profits  are  about  20  per  cent.  The  Granite  State 
Provident  Association  of  Manchester,  organized  in  1888,  has 
$813,000,  invested  in  loans,  with  11,000  shareholders,  no  los- 
ses and  two  foreclosures.  The  Concord  Building  &  Loan 
Association  begun  in  1887,  has  real  estate  loans  of  $79,200, 
with  2,922  shares  issued. 

Building  Associations  have  grown  very  rapidly  in  Illinois 
in  the  past  eight  or  nine  years.  The  associations  were  con- 
fronted with  constitutional  objections  that  threatened  their 
existence,  but  these  were  finally  and  favorably  disposed  of  by 
the  Supreme  Court,*  and  these  obstacles  removed,  they  have  a 
prosperous  career. 

The  Equitable  Savings  and  Loan  Homestead  Association  of 
Chicago,  organized  seven  years,  reports  March  31, 1892,  assets 
of  $411,312.00.     Its  profits  are  about  11  per  cent.     The  Dan- 


•Holmes  v.  Smythe,  100  111.  413;      tion,  114  111.  183;  Winget  v.  Quincy, 
Freeman  v.   Ottawa,  etc.,  Associa-      etc..  Association,  128  111.  67. 


SOME    RESULTS.  141 

ville  Building  A.ssociation  received  last  year  $220,754.85.  It 
hfis  been  organized  eleven  years  and  represents  the  new  growth 
of  associations  in  the  state.  Its  assets  are  $362,431.74  and  it 
pays  a  fraction  above  9  per  cent  profit. 

Associations  are  not  numerous  in  AVisconsin,  but  they  are 
steady  earners.  There  are  in  the  neighborhood  of  100  associa- 
tions in  the  state.  The  Home  Bnilding  and  Loan  Associa- 
tion of  Milwaukee,  in  four  years,  has  accumulated  assets  of 
$105,334.81,  and  makes  a  profit  of  12  per  cent  per  annum, 
pajing  10  per  cent  cash,  and  carrying  2  per  cent  to  the  reserve 
fund.  During  its  fourth  year,  to  October  24, 1891,  its  receipts 
were  $141,143.37. 

Associations  are  of  recent  development  in  Maine.  The 
York  Loan  &  Building  Association  of  Biddeford,  was  orga- 
nized January  21,  1889,  and  has  $31,295.02  in  assets.  It  has 
had  no  foreclosures  or  losses  and  pays  8  per  cent  on  the 
investment. 

A  large  association  in  Rhode  Island  is  the  Roger  Williams 
Building  and  Loan  Association.  The  other  associations  are 
at  Newport,  "Westerly  and  Woonsocket.  The  Roger  Williams 
has  been  organized  eleven  years  and  reports  assets  of  $582, 
974.64.  It  has  met  with  no  losses  and  has  had  three  fore- 
closures. Its  profits  have  averaged  a  trifle  over  7  per  cent. 
The  Homestead  Association  under  the  same  management,  is 
the  second  one  in  the  City  of  Providence,  and  has  been  in 
business  nine  months  and  has  received  and  loaned  abouti 
$10,000. 

In  North  Carolina,  the  Wilmington  Daily  Review  says: 
"We  have  seen  here  in  Wilmington,  some  of  the  excellent 
effects  derived  from  the  establishment  here  of  buildino- 
associations.  There  are  six  in  operation.  The  consequence 
,has  been  that  real  estate  has  held  its  own,  even  in  strincrent 
times,  and  that  new  dwelling  houses  are  going  up  continuously 
in  every  section  of  the  city."  The  Wilmington  Homestead 
and  Loan  Association,  starting  August  14,  1886,  has  assets  of 
$104,809.61,  with  no  losses  or  foreclosures,  and  a  profit  of 
10  2-5  per  cent  net.  The  Mechanics'  has  had  no  losses  or 
foreclosures  and  began  3  years  ago.     According  to  its  second 


142 


BUILDING   ASSOCIATIONS. 


annual  statement,  it  had  assets  of  $37,613.62  and  paid  a  profit 
of  llf  per  cent  net. 

In  West  Virginia,  the  Eagle  Building  Association  of  Wheel- 
ing, is  in  its  fourth  year,  and  has  assets  of  $83,672.31,  showing 
a  profit  of  about  10  per  cent. 

In  Minnesota,  the  assets  of  building  associations  reach  into 
the  millions  of  dollars,  the  great  bulk  being  in  St.  Paul  and 
Minneapolis.  The  state  law  requires  a  rigid  inspection.  The 
associations  are  prosperous  and  earn  heavy  profits.  The 
Kice  Street,  of  St.  Paul,  organized  9  years,  has  assets  of  $103,- 
385.34,  with  no  losses  and  a  profit  of  17  per  cent  for  the  aver- 
age time.  The  Seven  Corners,  organized  in  1884,  has  assets  of 
$66,790.39.  The  Globe  organized  in  1887,  has  assets  of  $31,- 
567.32.  The  Columbia,  starting  November,  1880,  has  assets  of 
$70,167.01.  These  associations  are  all  under  one  management 
and  show  about  the  same  results.  In  Minneapolis  are  located 
what  are  known  as  "J!^ational"  Associations,  i.  e.  associations 
making  loans  in  the  different  states.  They  have  accumulated 
enormous  amounts  of  money,  as  for  example.  The  Pioneer, 
organized  six  years,  reports  $1,632,400.60  assets  and  a  profit 
of  8  per  cent  on  the  investment  for  the  paid  up  shareholder 
and  a  larger  return  for  its  other  members. 

In  Mississippi,  the  Vicksburg  Building  Association  is  one 
of  the  largest.  It  was  organized  in  1870,  and  up  to  date  has 
retired  eleven  series.  Its  monthly  receipts  are  about  $10,000, 
and  it  now  has  assets  of  $519,900.74,  to  help  mature  the 
remaining  sixteen  series.  Its  last  year's  profits  jvere  about  20 
per  cent.  It  has  had  no  losses  and  not  a  foreclosure  in  the 
last  ten  years. 

Missouri  associations  are  growing  with  great  rapidity.  The 
Prudential  Building  and  Loan  Association,  of  Kansas  City,  in 
three  years  has  received  deposits  of  $73,651.31  and  has 
averaged  a  profit  of  10  1-2  per  cent  per  annum. 

In  Kansas,  their  early  history  was  a  disappointment  to  their 

friends,  and  their  prospects  were  discouraging,  but  since  they 

*  have  become  better  understood,  their  advantages  are  receiving 

appreciation.     The  Leavenworth  Mutual  Building,  Loan  and 

Savings  Association,  organized  three  years,  reports  $68,218.72 


SOME    RESULTS.  143 

of    assets.      The    profits    average    about    15  per    cent     per 
annnm. 

Iowa  associations,  while  not  large,  are  snccessful.  One  of 
the  oldest  is  the  Council  Bluffs  Savings,  Loan  and  Building 
Association,  incorporated  in  1877.  It  has  never  suffered  a 
loss  and  has  accumulated  assets  of  $130,311.68,  realizing  a 
profit  of  about  12  per  cent  per  annum. 

Building  associations  in  Colorado  are  a  growth  of  the  past 
ten  years.  A  few  institutions  had  been  working  quietly  prior 
to  that  time,  "  but  to-day  they  have,"  so  says  the  liepublican 
of  Denver,  "an  acknowledged  place,  like  the  banks,  among 
the  financial  institutions  of  the  city."  In  Denver,  there  are 
about  15,000  shareholders  in  31  associations,  with  combined 
resources  of  $5,500,000,  and  undivided  profits  approximating 
$2,000,000.  During  1891  they  loaned  $1,750,000  in  spite  o"f 
a  stringent  money  market.  The  profit  realized  is  from  8  to 
10  per  cent.  The  Denver  Home  and  Savings  Association,  in- 
corporated July  1,  1890,  has  assets  of  $108,013.65.  The  Peo- 
ple's Building  and  Loan  Association,  four  years  old,  reports 
assets  of  $462,871.25.  The  Capital,  of  the  same  duration,  has 
assets  of  $210,211.11.  The  Standard,  during  the  same  time, 
has  accumulated  $564,501.82  for  its  stockholders.  The  Home 
Mutual,  organized  in  1880,  has  assets  of  $403,082.43.  The 
serial  plan  is  the  one  usually  adopted,  and  the  instalment  pre- 
mium is  growing  in  favor,  although  most  of  the  older  associa- 
tions use  the  gross  premium  plan,  and  consequently,  deduct 
the  entire  premium  at  the  time  of  the  loan,  with  a  rebate  on 
withdrawal.  This  has  led  to  the  "  unearned  premium,"  which 
unsatisfactorily  creates  uncertainty  in  the  ultimate  profits. 
The  first  of  the  above  named  associations  is  on  the  "  Dayton 
plan,"  called  such  from  the  Mutual  Home,  Dayton,  Ohio. 
There  are  a  number  of  smaller  associations  outside  of  Denver, 
probably  a  dozen,  all  prospering. 

The  Wyoming  associations  are  not  numerous,  but  profitable. 
Interest  rates  are  high,  and  when  premiums  are  tacked  on,  the 
profit  is  enormous,  as  is  shown  by  the  results  of  the  Home 
Building  and  Loan  Association,  of  Cheyenne,  which,  after  one 
year  of  operations,  accumulated  $18,540.02  and  paid  its  stock, 
holders  41  1-2  per  cent. 


144 


BUILDING  ASSOCIATIONS. 


In  Oregon,  in  the  principal  cities  and  towns,  building  asso- 
ciations are  becoming  established.  Their  net  profits  average  14 
per  cent,  per  annum.  The  Franklin  Building  and  Loan  Asso- 
ciation, of  Portland,  is  eiglit  years  old,  has  assets  of  $448,352.- 
95,  with  1,000  shareholders  and  has  sustained  no  losses. 

There  are  about  135  associations  in  California,  with  assets  of 
about  $4,000,000.  Six  per  cent,  interest  is  paid  on  paid  up 
stock,  while  running  stock  averages  10  per  cent.  The  Home 
Security  Building  and  Loan  Association,  of  San  Francisco,  in- 
incorporated  July  20,  1875,  has  assets  of  $573,804.87.  The 
Home  Mutual,  organized  six  years,  has  assets  of  $170,171.- 
95.  The  Commercial,  five  years  old,  has  $95,347.05.  The 
Homestead,  six  years  old,  has  $206,568.00  and  the  Citizen's,  in 
its  seventh  year,  has  assets  of  $109,  901.40. 

The  Pioneer  association,  of  Omaha,  Nebraska,  is  the  Omaha 
Loan  and  Building  Association,  organized  in  April,  1883.  In 
about  nine  years  it  has  handled  $337,636.30  and  paid  off  its  first 
series,  wherein  the  shareholder   received  $200  for  $105  paid  in. 

In  Texas,  the  Dallas  Homestead  and  Loan  Association, 
organized  in  December,  1879,  has  assets  of  $400,000,  without 
a  loss  and  has  averaged  18^  per  cent  per  annum  profit.  The 
Mutual  Building  Association,  of  the  same  place,  started  in 
October,  1887,  and  has  assets  of  $300,000,  no  losses,  and  has 
made  15  1-2  per  cent. 

In  North  Dakota,  The  Fargo  Building  Association,  com- 
menced business  in  March,  1880,  and  has  assets  of  $19,308.39 
and  realizes  a  profit  of  about  10  per  cent  per  annum.  There 
are  other  associations  at  Grand  Forks  and  Lisbon,  all  prosper- 
ing. 

In  Indiana,  the  greater  number  of  the  associations  are  in  the 
city  of  Indianapolis,  there  being  about  120,  with  total  weekly 
deposits  of  about  $36,600.  There  are  about  35,000  sharehold- 
ers, and  the  associations  have  loaned,  within  the  past  four 
years,  it  is  estimated,  $4,243,344,  having  collected  $4,210,901. 
*The  deposits,  last  year  alone,  it  is  estimated,  were  $1,600,000. 
The  profits  vary  from  8  to  18  percent.  The  Star  Savings  and 
Loan  Association  has  assets  of  $144,169.26  and  realises  an 
average  profit  of  15^  per  cent  per  annum. 


SOME   RESULTS.  145 

The  Aetna  Saving  and  Loan  Association,  fonr  years  old,  has 
assets  of  $179,284.52  and  pays  18  per  cent  per  annum.  The 
German  American  Building  Association,  twenty  months  in 
business,  has  assets  of  $120,691.49  and  pays  eight  per  cent  to 
paid  up  shareholders  and  a  larger  profit  to  installment  stock. 
The  Indiana  Savings  and  Investment  Company,  three  years 
old,  has  assets  of  $108,771.73  and  pays  its  paid  up  sharehold- 
holders  8  per  cent,  per  annum.  Its  running  shares  receive 
additional  profit. 

Foreclosures  are  comparatively  few  and  losses  trifling.  The 
same  record  is  borne  by  associations  throughout  the  state. 
They  have  the  confidence  of  the  people  and  are  building  up 
solidly.  The  variance  in  the  profit  showings,  in  the  foregoing 
illustrations,  is  explainable  where  it  is  less  by  such  causes  as 
accumulated  idle  money  or  a  dull  demand  for  funds;  however, 
some  associations  adopt  low  premiums  as  a  policy  and  discour- 
age hio'h  biddinsr. 

The  figures  above  given  do  not  include  all  the  large  and 
profitable  associations  in  the  different  states.  There  are  many 
others  equally  or  more  prosperous.  The  results  illustrated  by 
these  associations  were  available  and  have  been  used  to  show 
the  growth,  security  and  profit  of  the  building  associations  in 
the  different  parts  of  the  country.* 

To  readily  understand  the  quick  and  increasing  profits  of 
an  association,  through  the  compounding  of  its  interest,  a 
glance  at  the  four  following  tables  will  serve, 

'The  above  figures  arc  taken  from  fused.    Building  associations  should 

reports  of  the  various  associations,  be  compelled  by  law  to  publish  at 

procured  with  care,  but  in  a  few  least  annual  reports  of  their  con- 

Btatea  requests  for  reports  were  re-  dition. 


10 


146 


BUILDING   ASSOCIATIONS. 

TABLE  No.  1. 


Showing  the  accumulations  of  one  dollar  per  month  at  10  per 
cent  interest,  compounded  monthly,  for  any  number  o£ 
months,  from  one  to  one  hundred  and  twenty  : 


o 
6 

o 

a 

CD 

o 
6 

31 

Amount. 

1 

CO 
-I-' 

a 
o 

d 

a 

53 
O 

a 

DQ 

•5 

o 
6 

o 

O 

a 

1 

1.01 

35.50 

61 

79.74 

91 

136.49 

2 

2.03 

32 

36.80 

62 

81.41 

92 

138.64 

3 

8.05 

33 

38 .  12 

63 

83.10 

93 

140.80 

4 

4.08 

34 

39.44 

64 

84.80 

94 

142.98 

5 

5.13 

35 

40.78 

66 

86.52 

95 

145.18 

6 

6.18 

36 

42.13 

6Q 

88.25 

96 

147.40 

7 

7.24 

37 

43.49 

67 

89.99 

97 

149.64 

8 

8.31 

38 

44.86 

68 

91.75 

98 

151  89 

9 

9.38 

39 

46.24 

69 

93.52 

99 

154.17 

10 

10.47 

40 

47.64 

70 

95.31 

100 

156.46 

11 

11.67 

41 

49.04 

71 

97.11 

101 

168.77 

12 

12.67 

42 

50.46 

72 

98.93 

102 

161.10 

13 

13.78 

43 

51.89 

73 

100.76 

103 

163.45 

14 

14.91 

44 

53.33 

74 

102.61 

104 

165.82 

15 

16.04 

45 

54.78 

75 

104.47 

105 

168.21 

16 

17.18 

46 

56.24 

76 

106.36 

106 

170.62 

17 

18.33 

47 

57.72 

77 

108.25 

107 

173  05 

18 

19.49 

48 

69.21 

78 

110.16 

108 

175.50 

19 

20.67 

49 

60.71 

79 

112.08 

109 

177.94 

20 

21.85 

50 

62.23 

80 

114.03 

110 

180.47 

21 

23.04 

51 

63.75 

81 

115.98 

111 

182.98 

22 

24.24 

52 

65.29 

82 

117.96 

112 

185.51 

23 

25.45 

53 

66.85 

83 

119.95 

113 

188.07 

24 

26.67 

54 

68.41 

84 

121.96 

114 

190.64 

25 

27.90 

55 

69.99 

85 

l!^3.98 

115 

193.24 

26 

29.14 

56 

71.58 

86 

126.02 

116 

195.86 

27 

30.39 

57 

73.19 

87 

128.08 

117 

198.50 

28 

31.65 

58 

74.81 

88 

130.16 

118 

201.16 

29 

32.92 

59 

76.44 

89 

132.26 

119 

203.84 

30 

34.21 

60 

78.08 

90 

134.36 

120 

206.55 

BUILDING  ASSOCIATIONS. 

TABLE  No.  2. 


147 


Showing  the  accumulations  of  sixty  cents  per  month  at  10  per 
cent  interest,  compounded  monthly,  for  any  number  of 
months,  from  one  to  one  hundred  and  twenty: 


ID 

a 
o 

'^ 
6 

O 

s 

-G 
C 

o 
d 

a 

1=1 
o 

a 

CO 

O 

d 
61 

-*-5 

PI 
!=! 
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CO 

O 

d 

(3 
O 

a 
< 

1 

.61 

31 

21.30 

47.84 

91 

81.89 

2 

1.22 

32 

22.08 

62 

48.85 

92 

83.18 

3 

1.83 

33 

22.87 

63 

49.86 

93 

84.48 

4 

2.45 

34 

23.67 

64 

50.88 

94 

86.79 

6 

3.08 

35 

24.47 

65 

51.91 

95 

87.11 

6 

3.71 

36 

25.28 

66 

52.95 

96 

88.44 

7 

4.34 

37 

26.09 

67 

53.99 

97 

89.78 

8 

4.98 

38 

26.92 

68 

55.05 

98 

91.13 

9 

5.63 

39 

27.75 

69 

56.11 

99 

92.50 

10 

6.28 

40 

28.58 

70 

57.19 

100 

93.87 

11 

6.95 

41 

29.42 

71 

58.27 

101 

95.26 

12 

7.60 

42 

30.27 

72 

59.36 

102 

96.66 

13 

8.27 

43 

31.13 

73 

60.46 

103 

98.07 

14 

8.94 

44 

32.00 

74 

61.67 

104 

99.49 

15 

9.62 

45 

32.87 

75 

62.68 

105 

100.93 

16 

10.31 

46 

83.75 

76 

63.81 

106 

103.37 

17 

11.00 

47 

34.63 

77 

64.95 

107 

103.83 

18 

11.70 

48 

35.53 

78 

66.09 

108 

105.30 

19 

12.40 

49 

36.43 

79 

67.25 

109 

100.78 

20 

13.11 

50 

37.34 

80 

68.42 

110 

108.28 

21 

13.82 

51 

38.25 

81 

69.69 

111 

109.79 

22 

14.54 

52 

39.18 

82 

70.78 

112 

111.31 

23 

15.27 

53 

40.11 

83 

71.97 

113 

112.84 

24 

16.00 

54 

41.05 

84 

73.17 

114 

114.38 

25 

16.74 

55 

41.99 

85 

74.39 

115 

115.94 

26 

17.48 

56 

42.94 

86 

75.61 

116 

117.51 

27 

18.24 

57 

43.91 

87 

76.84 

117 

119.10 

28 

18.99 

58 

44.88 

88 

78.10 

118 

120.70 

29 

19.75 

59 

45.86 

89 

79.35 

119 

122.31 

30 

20.52 

60 

46.85 

90 

80.62 

120 

123.93 

148 


BUILDING  ASSOCIATIONS. 


TABLE  No.  3. 


Showing  the  accumulations  of  one  dollar  per  month,  at  eight 
per  cent  interest,  compounded  monthly,  for  any  number  of 
months,  from  one  to  eighty: 


00 

■*-> 

c 
o 

;^ 

d 

PI 
pi 
o 

a 

tn 

C 

o 
6 

-•■3 

PI 

pi 

o 

a 

en 

o 
d 

41 

PI 
pi 
o 

a 

46.92 

CO 

O 

d 

d 

PI 
o 

a 

1 

1.01 

21 

22.42 

61 

74.88 

2 

2.04 

22 

23.58 

42 

48.23 

62 

76.38 

3 

3.04 

23 

24.75 

43 

49.54 

63 

77.88 

4 

4.07 

24 

25.90 

44 

50.87 

64 

79.41 

5 

5.10 

25 

27.08 

45 

52.22 

65 

80.94 

6 

6.14 

26 

28.24 

46 

63.57 

66 

82.47 

7 

7.19 

27 

29.46 

47 

54.94 

67 

84.03 

8 

8.24 

28 

30.64 

48 

56.27 

68 

85.78 

9 

9.31 

29 

31.86 

49 

57.66* 

69 

87.12 

10 

10.37 

30 

33.04 

50 

59.02 

70 

-  88.72 

11 

11.45 

31 

34.27 

51 

60.62 

71 

90.32 

12 

12.53 

32 

35.49 

52 

61.85 

72 

91.90 

13 

13.62 

33 

36.76 

53 

63.24 

73 

93.52 

14 

14.72 

34 

38.07 

54 

64.65 

74 

95.14 

15 

15.83 

35 

39.24 

55 

66.09 

75 

96.78 

16 

16.94 

36 

40.47 

56 

67.55 

76 

98.43 

17 

18.06 

37 

41.76 

57 

69.00 

77 

100-20 

18 

19.18 

38 

43.05 

58 

70.45 

78 

101.73 

19 

20.32 

39 

44.31 

59 

71.91 

79 

103.43 

20 

21.46 

40 

45.61 

60 

73.40 

so 

105.00 

BUILDING  ASSOCIATIONS. 


149 


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APPENDIX. 


STATUTES  AND  CONSTRUCTION. 


The  following  references  show  where  the  statutes,  and  deci- 
sions construing  them,  which  relate  to  building  associations  in 
the  different  states,  may  be  found. 

Alabama.  See  Code  1886,  sections  1553,  et  seq.;  Statutes 
1888-9,  p.  31. 

Arkansas.  Organized  under  general  stock  company  statute 
of  1869;  Digest  Stat.  1884,  sees.  960,  et  seq.;  See  Acts  1883,  p. 
227;  Statutes  1884,  sections  5644,  et  seq. 

California.     See  2  Deering's  Codes,  sections  283,  571,  679. 
Colorado.     See  Laws  1889.  p.  41,  et  seq. 

Connecticut.  See  Gen.  Stat.  1888,  sec.  1,  where  it  is 
provided  that  the  term  "saving  banks"  shall  inchide  savings 
societies,  and  see  chapter  CX.,  concerning  "Savings  Banks." 
Construction  of  the  act  of  1850;  Mutual  Savings,  etc..  Asso- 
ciation V.  Wilcox,  24  Conn.  147,  154;  Id.  v.  Meriden,  etc., 
Company,  24  Conn,  159;  and  see  West  Winsted,  etc..  Associa- 
tion V.  Ford,  27  Conn.  282;  Id.  v.  Kice,  lb.  293;  Babcock  v. 
Middlesex,  etc.,  Bank,  28  Conn.,  302. 

Dakota.     See  Compiled  Laws,  1887,  sections  3166,   et  seq. 

Delaware.     See  Laws  1875,  p.  188;  Special  Incorporations, 

see  Acts  1877,  1891. 

(153) 


154  BUILDING  ASSOCIATIONS. 

Florida.     See  Act  of  May  31,  1887;  also  Acts  1889,  p.  115. 

Georgia.  Incorporated  by  decree  of  court;  See  Code  1882, 
sections  1674,  1676;  Construction;  See  Eedwine  v.  Gate  City 
etc.,  Association,  54  Ga.  474;  see  also  In  re.  Deveaux,  lb.  673; 
See  R.  S.  1882,  section  3968;  Acts  1888,  p.  47;  Acts  1889,  p. 
180;  Acts  1890-1  part  1,  p.  176;  Construction;  See 
McGowan  v.  Savannah,  etc.,  Association,  80  Ga.  515. 

Illinois.  See  Starr  &  Curtis,  Ann.  Stat..  Yol  1,  pp.  629,  et 
seq.  ib.,  Yol.  3,  p.  282.  Former  Statutes;  Laws  1869,  p.  105; 
1871,  p.  173;  1879,  p.  83. 

Indiana.     See  Elliott's  Supp.  Sections,  840,  et  seq. 

Iowa.     See  McClain's  Ann.  Code,  Sections  1290,    1784-87. 

Kansas.  See  General  Statutes  1889,  sections  1424,  et  seq. 
Statutory  Construction;  see  Salina  etc.,  Association  v.  Nelson, 
22  Kans.  751. 

Kentucky.     Incorporation  by  special  enactment. 

Lousiana.     See  Acts  1888,  pp.  177,  212. 

Maine,  See  E.  S.  1883,  p.  435,  sec.  132 ;  Acts  1889,  p.  146 ; 
Acts  1891,  p.  64. 

Maryland.  See  Pub.  Gen.  Laws  1888,  p.  312;  Statutory 
Construction;  See  Border  State,  etc.,  Association  v.  Hayes,  61 
Md.  597. 

Massachusetts.  See  Pub.  Stat.  1882,  pp.  134,  572,  667, 
1004.  Suppl.  Publ.  Stat.  1888,  pp.  63,  64,  103,  276,  648, 
549;  Acts  1889,  pp  893,  1177;  Acts  1890,  pp.  60,  71,  213, 
262;  Acts  1891,  pp.  722,  1010.  Statutory  Construction; 
See  Baxter  v.  Mclntire,  79  Mass.  168;  Manahan  v.  Yarnum, 
77  Mass.  405;  Cook  v.  Kent,  105  Mass.  246. 

Michigan.  See  Howell's  Ann.  Supl.  Statute  1890,  Sections 
3981,  et  seq. 


APPENDIX.  155 

Minnesota.  See  Statutes  1891,  sections  1421,  et  seq.,  and 
2409  et  seq.  Statutory  Construction;  see  State  v.  Eedwood 
Falls,  etc.,  Association,  45  Minn.  154. 

Mississippi.  Incorporation  by  special  enactment;  see  Acts 
1886  pp.  20,  35;  Acts  1888,  p.  17;  Acts  1890,  p.  10. 

Missouri.  See  R.  S.  1889,  Sections  2808,  et  seq.;  Acts 
1891,  p.  74.  Statutory  Construction;  See  Ma^uire  v.  State, 
etc.,  Association,  62  Mo.  344;  State  v.  McGrath,  95  Mo.  193. 

Montana.     See  Comp.  Statutes  1888,  pp.  795,  et  seq. 

Nebraska.  See  (^orap.  Statutes  1887,  p.  258;  Stat.  Laws 
1891,  Chap.  14,  p.  200. 

Kew  Hampshire.  See  Public  Statutes,  1891,  pp.  204,  205, 
459,  460,  472,  et  seq. 

New  Jersey.  See  E.  S.  Suppl.  1886,  pp.  69,  70,  138,  et  seq. 
R.  S.  1877,  pp.  92,  et  seq.  and  p.  1272;  Acts  1887,  p.  62;  Acts 
1888  p.  36;  Acts  1889,  p.  299;  Acts  1890,  pp.  420,  427,  441. 
Statutory  Construction;  Savinojs  Association  v.  Vandervere, 
3  Stock,  382;  People's,  etc.,  Association  v.  Furey,  20  Atl.  Rep. 
890;  Vanneman  v.  Swedesboro,  etc..  Association,  15  Stew.  263; 
Newton  Tp.,  etc..  Association  v.  Boyer  15  Stew.  273;  Washing- 
ton Association  v.  Creneling,  10  Yr.  465;  Id.  v.  Horn  baker 
12  Vr.  519;  For  bill  in  equity  held  defective,  see  McNeal  v. 
Florence,  etc..  Association,  13  Stew.  351. 

New  Mexico.  See  Acts  1887,  pp.  22,  et  seq.,  also  amendatory 
act  of  1889;  Acts  1889,  pp.  266,  et  seq. 

New  York,  xiuthorized  by  manufacturing  acts  1879, 1880, 
1884.  See  P.  S.  1889,  pp.  1587,  et  seq.;  See  also  P.  S.  1890, 
(Birdseye  Ed.)  pp.  343,  et  seq.;  Laws  1891,  p.  318.  Statutory 
Construction;  see  Franklin  etc.,  Association  v.  Mather,  4  Abb. 
Pr.  274;  Second  Manhattan  etc.,  Association  v.  Ilayes,  2  Kejes 
192;  Remington  v.  King,  11  Abb.  Pr.  278. 


156 


BUILDING  ASSOCIATIONS. 


North  Carolina.  See  Code,  "Vol.  2,  Chap.  7,  Sec.  2,294,  et 
seq;  Battle's  Kevisal,  pp.  105,  et  seq.  Laws  1881,  p.  604; 
Laws  1891,  p.  1,041. 

Ohio.  See  1  E.  S.  1890,  sections  3,81T,  3,883,  et  seq  and 
3,935.;  Laws  1891,  pp.  469,  et  seq.  Statutory  Construction; 
Windhorst  v.  Building  Association,  7  Bull.  29;  Licking 
County,  etc.,  Association  v.  Bebout,  29  Ohio  St.  252;  Forrest 
City,  etc..  Association  v.  Gallagher,  25  Ohio  St.  208;  State  v. 
Building  Association,  35  Ohio  St.  258;  Bates  v.  People's, 
etc..  Association,  42  Ohio  St.,  655. 

Oregon.  For  incorporation,  see  general  statute  for  private 
corporations,  2  Hill's  Ann.  Laws,  sees.  3,217,  et  seq;  also.  Laws 
1891,  p.  131. 

Pennsylvania.  See  Brightley's  Purdon's  Digest,  pp.  223,  et 
seq.  Acts  1891,  p.  174.  Statutory  Construction ;  See  Cooper 
V.  Association,  100  Pa.  St.  402;  O'Rourke  v.  Building  Asso- 
ciation, 8  W.  N.  C.  176;  Houser  v.  Herman,  etc.,  Association, 
41  Pa.  St.  478 ;  Marble,  etc..  Association  v.  Hocker,  3  Phila. 
494;  Building  Association  v.  Eshelbach,  7  Phila.  189;  Spring 
Garden  Association  v.  Tradesmen's,  etc..  Association,  46  Pa.  St. 
493;  Springville,  etc..  Association  v.  Raber,  33  Leg.  Int.,  329; 
Snider's  Estate,  34  Leg.  Int.  49;  Schober  v.  Accommodation, 
etc.,  Association,  35  Pa.  St.  223;  Building  Association  v.  See- 
miller,  35  Pa.  St.  225 ;  Philadelphia,  etc..  Association  v.  Moore, 
21  Leg.  Int.,  109;  Flounders  v.  Hawley,  78  Pa.  St.  45;  Wol- 
bach  V.  Lehigh,  etc..  Association,  4  W.  N.  C.  157;  Jarrett  v. 
Cope,  68  Pa.  St.  67;  Rhoads  v.  Hoernerstown,  etc.,  Associa- 
tion, 82  Pa.  St.  180;  Building  Association  v.  Building  Asso- 
ciation, 100  Pa.  St;  191;  Commonwealth  v.  Association,  2 
Chest.  189;  Association  v.  Commonwealth,  lb.  546;  Building 
Association  v.  Commonwealth,  98  Pa.  St.  54;  Abbott  v.  Build- 
ing Association,  1  Del,  397;  Building  Association  v.  Robin- 
son, 46  L.  I.  5;  Hansbury  v.  Pfeiffer,  35  L.  I.  395;  Heckman 
V.  Building  Association,  11  L.  Bar.  110;  Link  v.  Building 
Association,  89  Pa.  St.,  15;  Rowland's  Estate,  1  Del.  98;  Fred- 
ericks V.  Corcoran,  100  Pa.  St.  413;  Building  Association  v. 


APPENDIX.  157 

Hanlen,  T  Lnz.  L.  Keg.  165;  Becket  v.  Building  Association, 
88  Pa.  St.  211;  Selden  v.  Building  Association,  32  P.  F. 
Sm.  336;  Building  Association  v.  Iloarj,  8  Luz.  L.  Reg.  180; 
Saving  Fund  v.  Longshore,  lb.  199;  Sherman,  etc.,  Association 
V.  Rock,  9  Phila.,  75;  Building  Association  v.  Coleman,  89  Pa. 
St.  428;  Miller's  Estate,  2  Pears.  348. 

Rhode  Island.     Incorporated  by  special  enactment. 

South  Carolina.  Special  incorporations;  Bee  Acts  18S3, 
1886,  1887,  1888,  1889;  General  Statute,  Acts  1885,  p.  40, 
Act8l888,  p.  46. 

Tennessee.  Incorporation  by  special  enactment.  See  Code 
1884;  Sections   1742  et  seq..  Acts  1891,  p.  17. 

Texas.  Incorporated  under  Clause  17,  Article  566,  Sayle's 
Civil  Statute  concerning  "  Corporations." 

Utah.     See  Acts  1890,  p.  7. 

Virginia.  See  Statues  1852,  pp.  81-3;  see  also  Code  1887, 
Sees.  1145,  et  seq.  The  Richmond  Perpetual  Building,  Loan, 
and  Trust  Company  was  incorporated  by  special  enactment. 
See  Act  of  March  30,  1875,  amended  March  2,  1888.  Statu- 
tory  Construction ;  Davies  v.  Creighton,  33  Grat.  606. 

Wisconsin.  See  Sanborn  <fc  Berryman's  Ann.  Stat.,  pp. 
1,204,  et  seq.,  Statutory  Construction;  Wood  v.  Union  Gospel, 
etc..  Association,  63  Wis.  9;  Wood  v.  Hoskin,  63  Wis.  15. 

Washington.     See  Acts  1891,  p.  199. 

West  Yirginia.  See  Chapter  26,  R.  S.  1879;  Code  1891, 
pp.  514,  et  seq. 

Statutory  Construction;  see  Pfeister  v.  Wheeling,  etc..  Asso- 
ciation, 19  W.  Ya.,  676. 


158 


BUILDING  ASSOCIATIONS. 


Wyoming.  For  incorporation  of  Saving  Associations,  see 
Laws  1888,  pp.  193,  et  seq.  The  association  contemplated  ifl 
of  a  savings  bank  character. 

FORMS. 

PEELIMINARY  AGREEMENT  FOR  INCOR- 
PORATION. 

"We,  the  undersigned,  do  each  of  us  hereby  agree  to  form 
ourselves  into  a  building  association,  under  the  laws  of  the 
State  of ,  and  to  take  the  number  of  shares  in  said  asso- 
ciation set  opposite  our  respective  names,  and  pay  the  dues 
thereon,  as  may  be  required  by  said  association.  In  the  event 
such  association  is  not  incorporated,  we  and  each  of  us,  agree 
to  bear  our  proportionate  part  of  the  proper  expense  incurred 
in  the  efiPort  to  organize  and  incorporate  such  association. 

APPLICATION  FOR  MEMBERSHIP. 

No.  of  Shares No 

I being  desirous  of  obtaining shares  in  the 

Association,  of , ,  each  of  the  matur- 
ing face  value  of  $ ,  do  hereby  make  application  there- 
for. I  do  hereby  agree  to  abide  by  all  the  terms  and  condi- 
tions contained  or  referred  to  in  the  certificate  of  shares,  and 
I  hereby  certify  that  I  have  carefully  read  the  printed  litera- 
ture of  the  Association,  and  make  this  application  to  become  a 
member  from  the  facts  set  forth  in  said  literature,  and  from 
said  facts  only,' and  I  hereby  agree  to  abide  by  the  same. 

*I  hereby  appoint ,  or  his  successor  in  ofBce,  to 

vote  in  my  place  and  stead,  as  my  proxy,  and  authorize  him  in 
my  name  and  during  my  absence,  to  vote  at  any  election  of 
officers  and  directors,  and  on  any  and  all  matters  which,  at  any 
meeting  of  the  members  may  properly  come  before  them ;  said 
appointment  is  made  and  such  proxy  is  to  be  held  and  vote  to 
be  cast  in  all  respects  in  accordance  and  conformity  with  Sec- 
tion   of  the  By-Laws  of  the  Association.  I  will  also  com- 
ply with  all  the  Articles  of  the  Association,  By-Laws,  Rules 
and  Regulations  of  said  Association,  and  hereby  make  the 
same  a  part  of  this  contract  with  said  Association, 


APPENDIX. 


159 


Name  in  full 

Age Married  or  single.. Occupation. 


STREET  AND 
NUMBKR 

TOWN  OR 
CITY. 

COUNTY. 

STATE. 

Residence, 

Post-Office  Address' 

If  Trustee, 
Fob  Whom 


rName  in  full. 


Residence. 


I^Relationship  and  Age 

Kind  of  shares  desired,  whetlier  installment  or  paid  up. 
Are  you  a  member  of  this  Association? 

If  so,  How  many  shares  do  you  hold  ?. 


If  Application  is  Made  for 

Transfer  from  Whom 

Dated  at 


TName. 


<|  Number  of  book  or  certificate 

[^Number  of  shares  transferred 

this day  of 189 

Signature  of  applicant 

Witness. 


rOEM  OF  ARTICLES  OF  ASSOCIATION". 

The  form  of  the  incorporating  articles  will  depend,  to  some 
extent,  upon  the  statute  of  the  state.  It  must  be  consulted  to 
conform  with  it,  but  the  general  character  may  be  seen  from 
the  following  articles,  incorporating  an  Oregon  association: 

Akticles  of  Incorporation  of  the  Franklin  BuiLDiNa  and 
Loan  Association,  of  Portland,  Oregon, 
Know  all  Men  by  these  Presents,  that  we,  the  under- 
signed, John  A.  Child,  Robert  Newcomb,  J.  II,  Lyon,  Wil- 
liam Stokes,  W.  M.  Gregory,  N.  Yersteeg,  Alfred  Thompson, 
have  this  day  associated  ourselves  together  for  the  purpose  of 
establishing  a  private  corporation,  under  the  general  laws  of 
the  State  of  Oregon,  and  for  that  purpose  do  hereby  make  and 
iBubscribe  in  triplicate  the  following  articles. 


160 


BUILDING  ASSOCIATIONS. 


AETICLE  I.« 
The  name  assumed  by  this  corporation,  and  by  which   it 
shall  be  known,  is  "  The  Franklin  Building  and  Loan  Asso- 
ciation;" and  the  duration  of  the  said  corporation  shall  be 
unlimited. 

ARTICLE  II. 

The  enterprise  or  business  in  which  the  said  corporation 
proposes  to  engage  is — 

1.  To  raise  a  capital  fund  in  shares  of  two  hundred  dollars 
each,  payable  by  monthly  installments;  such  payments  to 
accumulate  at  interest  and  prolit  until  the  par  value  shall  be 
attained,  when  the  amount  shall  be  paid  to  the  shareholders 
and  the  stock  revert  to  the  Association. 

2.  To  grant  loans  of  money  to  members,  upon  the  security 
of  freehold  or  leasehold  properties,  upon  United  States  bonds, 
or  upon  the  shares  of  this  corporation  only. 

3.  To  buy,  improve,  and  sell  real  estate. 

4.  To  receive  money  on  deposit,  at  interest  or  otherwise, 
repayable  at  call  or  fixed  periods. 

ARTICLE  IIL 
The  said  corporation  shall  have  its  principal  office  and  place 
of  business  in  the  city  of  Portland,  in  the  county  of  Multno- 
mah, and  State  of  Oregon. 

ARTICLE  lY. 
The  capital  stock  of  the  incorporation  shall  be  the  sum  of 
four  hundred  thousand   dollars,  divided  into  two  thousand 
shares. 

ARTICLE  y. 
The  amount  of  each  share  shall  be  two  hundred  dollars. 

ARTICLE  YI. 
The  sums  to  be  paid  by  shareholders  on  their  respective 
shares,  the  time  when  such  payments  shall  be  made,  the  pen- 
alties for  delay  or  neglect  in  making  such  payments,  and  also 
the   manner  and  terms    upon    which   shareholders  shall   be 

•The  part  following  the  formal  parts  should  adhere  closely  to  the  statute. 


APPENDIX.  161 

entitled  to  withdraw  their  shares  from  the  Association,  shall 
be  determined  by  the  Bj-Laws,  which  the  stockholders  shall 
have  power  to  make,  in  accordance  with  the  Constitution  and 
Laws  of  the  United  States  and  of  the  State  of  Oreiron. 

AETIOLE  YII. 

The  number,  titles,  functions  and  compensation  of  the  offi- 
cers of  this  corporation,  the  time  and  manner  of  their  election, 
and  the  time  for  the  periodical  meetings  of  this  corporation 
shall  be  determined  by  the  said  By-Laws. 

ARTICLE  YIII. 

The  officers  of  this  corporation  shall  hold  stated  meetings  at 
which  the  money  i]\  the  treasury  of  the  corporation,  or  such 
portion  thereof  as  they  shall  deem  advisable,  shall  be  offered 
for  loan,  upon  such  terms  and  conditions  as  shall  be  directed 
in  the  said  By-Laws. 

In  Witness  Whereof,  we  have  hereunto  set  our  hands  and 
seals  this  seventh  day  of  April,  one  thousand  eight  hundred 
and  eighty-three. 

JOHI^  A.  CHILD,  [SEAL. 

R.  NEWCOMB,  [SEAL. 

J.    H.    LYOJ^,  [SEAL. 

WM.  STOKES,  [SEAL. 

W.  M.  GREGORY,  [seal. 

N.  7ERSTEEG,  [SEAL. 

A.  THOMPSON,  [SEAL 

Signed  and  sealed  in  presence  of 
J.  B.  Scott, 
W.  A.  Gkadon. 

STATE  OF  OREGON",  ) 
County  of  Multnomah,  f  * 
Be  it  remembered,  that  on  this  seventh  day  of  April,  A.  D. 
1883,  before  me,  the  undersigned,  a  Notary  Public,  in  and  for 
said  county  of  Multnomah,  and  State  of  Oregon,  personally 
appeared  the  within  named  John  A.  Child,  Robert  Newcomb, 
J.  H.  Lyon,  William  Stokes,  W.  M.  Gregory,  N.  Yersteeg 
and  A.  Thompson,  to  me  known  to  be  the  identical  persons 
described  in  and  who  executed  the  foregoing  Articles  of  Incor- 


162  BUILDING  ASSOCIATIONS. 

poration,  and  severally  acknowledged  to  me  that  they  executed 
the  same  freely  and  voluntarily  and  for  the  uses  and  purposes 
therein  mentioned. 

In  testimony  whereof,  I  have  hereunto  set  my  hand  and 
aflSxed  my  notary  seal. 

Done  in  triplicate,  on  the  day  and  year  in  this  certificate 
above  written.  ^ 

J.  B.  SCOTT, 
[l.  8.]  Notary  Public  in  and  for  Oregon. 

Office  Secretary  of  State,  ) 
Salem,  April  10, 1883.      f 
Articles  of  Incorporation  of  the  "  Franklin  Building  and 
Loan  Association,"  of  Portland,  Oregon,  were  recorded  and 
filed  in  this  oflice  on  the  10th  inst. 

K.  P.  EAEHAKT, 

Secretary  of  State. 

If  the  incorporation  is  by  special  enactment  of  the  Legisla- 
ture, the  following  act  incorporating  the  "  Guardian,"  of 
Wilmington,  Delaware,  may  be  consulted. 


ACT  OF  INCORPORATION. 

An  Act  to    Incorporate    "  The    Guardian    Savings    and 
Loan  Association.  " 

Be  it  enacted  hy  the  Senate  and  House  of  Representatives 
of  the  State  of  Delaioare,  in  General  Assembly  met,  (two- 
thirds  of  each  branch  concurring  herein^ 

Section  1.  That  Daniel  H.  Kent,  James  H.  Semple, 
Robert  McCaulley,  Henry  R.  Pennington,  John  H.  Simms, 
B.  Frank  McDaniel,  Henry  P.  Scott,  Samuel  C.  Pierce,  Henry 
F.  Pickels,  John  B.  Price,  Edwin  W.  Jackson,  Henry 
Evans,  Samuel  C.  Penrose,  Solomon  H.  Staats,  Samuel 
H.  Baynard,  and  William  E.  Harkins,  and  such  other  persons, 
as  are  now  or  hereafter  may  be  associated  with  them,  and 
their  successors,  be,  and  they  are  hereby     created   a   body 


APPENDIX.  163 

politic  and  corporate,  by  the  name,  style,  and  title  of  "  The 
Guardian  Savings  and  Loan  Association,"  for  the  purpose  of 
accumulating  a  fund  from  monthly  contributions  and  fines, 
premiums  on  loans  and  interest  on  investments,  for  the  benefit 
of  its  members,  and  by  the  said  name,  style  and  title,  shall 
have  succession  for  twentj'  years,  and  be  able  and  capable  in 
law  to  sue  and  be  sued,  plead  and  be  impleaded  in  all  courts 
of  law  and  equity  in  this  State  and  elsewhere;  to  have  and  use 
a  common  seal,  and  the  same  to  alter  and  renew  at  pleasure; 
to  ordain,  establish,  and  enforce  by-laws  not  repugnant  to  the 
Constitution  and  Laws  of  the  United  States,  and  of  this  State; 
and,  generally,  to  exercise  and  enjoy  all  the  powers,  privileges, 
and  franchises  of  a  corporation  aggregate,  except  banking 
powers. 

Sec,  2.  The  said  corporation  shall,  by  the  name,  style  and 
title  aforesaid,  be  able  and  capable  of  purchasing,  receivino-, 
having,  holding,  and  enjoying  to  itself  and  its  successors  and 
assigns,  lands,  tenements,  hereditaments,  annuities,  money, 
securities,  goods,  chattels  and  effects,  of  what  nature  or  kind 
soever,  real,  personal,  and  mixed;  provided,  the  same  shall 
not  exceed  the  sum  or  value  of  six  hundred  thousand  dollars; 
and  the  same,  from  time  to  time,  at  pleasure  to  sell,  grant, 
demise,  bargain,  alien,  and  dispose  of;  and,  also,  to  make  such 
laws,  rules,  regulations,  and  contracts,  and  the  same  to  alter, 
amend  or  repeal  as  the  said  Corporation  shall  deem  proper 
and  expedient,  for  conducting  the  affairs  and  business  of  said 
Corporation ;  and,  generally,  to  do  all  and  singular  the  matters 
and  things  necessary  and  proper  for  the  good  government 
and  well  being  of  said  Corporation;  provided,  the  same  be  not 
contrary  to  the  provisions  of  this  Act  or  the  Constitution  and 
Laws  of  the  United  States,  and  the  State  of  Delaware. 

Sec.  3.  The  affairs  and  business  of  said  Corporation  shall 
be  conducted  by  a  President,  Vice  President,  Secretary  and 
Treasurer,  and  nine  Managers,  who  shall  constitute  a  Board  of 
Directors,  seven  of  whom  shall  be  a  quorum.  The  President, 
Yice    President,    Secretary    and  Treasurer,  shall  be  elected 


164  BUILDING  ASSOCIATIONS. 

annually.  At  the  first  regular  meeting,  after  the  passage  of 
this  Act,  there  shall  be  nine  Managers  elected,  who  shall, 
within  ten  days  thereafter,  meet  and  divide  themselves  into 
three  classes,  and  draw  lots,  for  one,  two  or  three  years,  and 
at  every  annual  meeting  thereafter,  three  managers  shall  be 
elected  to  serve  three  yearS;  The  said  Board  of  Directors 
shall  have  power  to  fill  all  vacancies  that  may  occur  in  their 
own  body  during  the  year. 

Sec.  4.  The  funds  of  said  Corporation,  as  they  accumulate 
in  the  Treasury,  shall  be  offered  and  loaned  by  the  Board  of 
Directors,  to  the  highest  bidder  among  the  stockholders.  In 
case  no  stockholder  offers  to  borrow  said  funds  at  the  rate 
fixed  by  law,  then  the  Board  of  Directors  shall  have  power  to 
loan  to  persons  not  members  or  stockholders  of  the  said  Cor- 
poration, at  a  rate  of  interest  not  exceeding  that  fixed  by  law. 

Sec.  5  This  act  shall  be  deemed  and  taken  to  be  a  private 
Act,  and  the  power  to  revoke  the  same  is  hereby  reserved  to 
the  Legislature. 

Passed  at  Duver^  Del.,  Feb.  20,  1883. 


GEO.  H.  BATES, 
Speaker  of  the  House  of  Representatives, 

SAMUEL  B.  COOPER, 

Speaker  of  the  Senate. 


APPENDIX. 


165 


rOKM  OF  STOCK  CEKTIFICATE. 


Certificate  No 

For Shares 

Issued  to 


Date 18.. 

Received  this 

Certificate 

18.. 

Tranferred   from 

to 

Date 18.. 

Reissued 

See  Certificate 
No 


Stock  Certificate — Non-Foefettable. 
No Shares,  ^100.00 


Building  Association. 

This  Certifies,  that of  the  County 

of State   of is    the  owner 


of., 
the. 
par 


. .  Shares  of  the  Capital  Stock  of 
...Building  Association,  of  the 
value  of  One  Hundred  dollars 
each,  subject  to  the  provisions 
of  the  by-laws  of  the  said  Asso- 
ciation. Transferable  on  the 
[seal.]  books  of  the  Association  only 
on  the  surrender  of  this  Cer- 
tificate. 

Given  under  the  seal  of  the 

Association,  at this 

day  of 18.. 

, Secretary President. 


ASSIGNMENT. 


For  value  received,  I  hereby  assign  the  within  Certificate  of 

Stock  to of  the  County  of State  of 

this day  of ,  18 . . ,    and  I  hereby  authorize 

the  Secretary  to  transfer  the  same  on  the  books  of  the  Asso- 
ciation. 

Witness  my  hand  and  seal  this day  of 

18.. 

Witness 

The  following  by-laws  incorporate  the  essertial  points  to  be 
observed  by  the  association  and  have  been  prepared  with  spe- 
cial reference  to  the  avoidance  of  legal  contentions. 

BYLAWS. 

Section  1.  The  name  of  this  association  shall  be  the.... 
....  association  of 


166 


BUILDING  ASSOCIATIONS. 


Sec.  2.  Tlie  object  of  this  association  is  to  provide  for  its 
members  a  safe  and  profitable  investment  of  their  savings,  and 
to  loan  money  on  easy  terms  to  its  members  in  manner 
provided  by  law. 

Sec.  3.     The  capital  stock  of   this  association  shall  be ... . 

....  dollars,  divided  into  shares  of  $ each,  to  be  issued 

(whenever  applied  for,  or  (in  series  of shares),  at  discre- 
tion of  the  board  of  directors. 

Sec.  4.  Every  share  of  stock  shall  be  subject  to  lien  for  the 
payment  of  unpaid  instalments  and  other  chai-ges  incurred 
thereon. 

Sec.  5.  Ko  member  in  arrearages  to  the  association  in  any 
manner  whatever,  shall  be  allowed  to  vote  at  the  meetings  of 
the  association,  until  all  such  arrearages  shall  have  first  been 
paid. 

Sec.  6.  No  member  who  is  indebted  to  the  association  as  a 
borrower  shall  be  allowed  to  vote  upon  any  matter  affecting 
the  claim  of  the  association  against  himself. 

Sec.  7.  Any  person  taking  shares  in  any  series  after  the 
same  has  been  started,  shall   pay  in  addition   to  dues  thereon 

to  the  beo-inning,  interest  on    such  dues  at  the   rate  of per 

cent  for  the  average  time.' 

Sec.  8.  Whenever  the  shares  of  stock,  (in  any  given  series),' 
of  this  association,  shall  have  been  redeemed  by  loans  or 
advances  thereon,  or  whenever  the  funds  and  property  of  the 
association  in  any  given  series  shall  be  sufficient  to  pay  all  of i 
the  debts  of  the  association,  and  to  pay  upon  the  unredeemed 

shares  of  such   given   series   the  par  value  thereof, 

hundred  dollars,  then  the  debts  of  the  association  shall  first  be 
paid  and  the  deeds  of  trust  or  mortgages  of  borrowers  in  such 
series  shall  be  released  of  record,  and  their  bonds  or  other 
evidence  of  indebtedness  delivered  to  them,  and  their  stock 
shall  be  cancelled,  and  the  free  or  unborrowed  shares  shall  be 
redeemed  or  paid  off.  When  all  the  stock  of  a  series  (or  share 
if  the  association  is  a  permanent)  is  matured,  then  each  holder 
of  stock  shall  be  notified  thereof,    in  writing,  by  mail,  to  the 


•Omit  if  permanent. 


^Insert  this  clause  if  the  associa- 
tion is  a  serial  one. 


APPENDIX.  167 

residence  of  such  stockholder,  as  shown  by  the  books  of  the 
association.  Payment  of  unpledged  stock,  shall  be  in  the 
order  of  presentation  of  notice  from  such  holders,  that  they 
desire  to  be  paid.  The  holders  of  matured  stock,  not  desiring 
to  be  paid,  may  leave  the  amount  thereof,  with  the  association, 
if  the  directors  so  elect,  and  receive  thereon  such  interest  as  the 
directors  may  see  fit  to  allow,  and  the  amount  so  left  by  any 
series,  shall  be  considered  a  debt  against  the  series,  having  the 
use  of  the  money,  which  may  be  paid  whenever  the  directors 
elect.  Such  holder  shall  be  considered  a  creditor,  and  not  a 
member  of  such  association,  from  the  time  of  notice  by  the 
association  of  the  maturity  of  his  stock. 

!N^ew  shares  of  stock  may  be  issued  in  lieu  of  all  shares 
redeemed,  forfeited  or  matured. 

Sec.  9.  'Should  any  member  desire  to  pay  in  the  full  face 
value  of  his  shares  at  the  time  of  subscribing  for  the  same,  or 
at  any  time  thereafter,  or  should  any  member  whose  shares 
have  become  paid  up,  as  provided  in  section  8,  prefer  to  allow 
the  money  due  thereon  to  remain  in  the  association,  the  Board 
of  Directors,  may,  if  they  think  best,  and  upon  such  terms  as 
they  may  prescribe,  accept  said  money,  and  issue  to  such 
member  a  certificate  of  paid  up  stock,  for  the  shares  so 
paid  up. 

Sec.  10.     Each  and  every  shareholder,  for  each  and  every 

share  he  or  she  may  take,    shall  pay  the  sum  of 

into  the  treasury,  on  the in  every until  each 

share   (of   the  series)   shall  reach   the  value  of 

hundred  dollars,  and  dues  not  paid  in  before 

shall  become  delinquent,  and  fines  accrue  on  the  same.  The 
payments  of  dues  on  a  series  of  stock  shall  commence  at  the 
date  of  the  issue  of  the  same. 

Sec.  11.  Each  member  shall  be  entitled  to  a  certificate  of 
the  stock  for  each  share  held  by  him  or  her,  to  be  issued  in 
the  name  of  and  under  the  seal  of  the  association. 

Each  shareholder  shall  also  be  entitled  to  a  pass  book,  marked 

*If  authorized  by  statute  this  section  Is  proper. 


168  BUILDING  ASSOCIATIONS. 

with  his  name  and  residence,  also  numbered,  and  designating^ 
the  number  of  shares  owned,  the  number  of  series  and  date  of 
issue  in  which  all  payments  of  dues,  interest  and  fines  shall  be 
entered;  and  no  money  shall  be  received  without  the  pass  book. 

Any  stockholder  may  sell  or  transfer  his  share  or  shares,  or 
any  number  of  them,  to  any  stockholder  or  any  other  person, 
the  said  person  to  have  the  right  and  obligations  of  the  person 
from  whom  he  purchased,  and  said  purchase  shall  make  him 

a  stockholder  and  every  person  purchasing  shal]  pay 

cents  for  each  and  every  share  so  transferred.  Shares  are 
transferable  only  on  the  books  of  the  association  and  in  the 
presence  of  the  secretary.  Transfers  of  stock,  to  enable  the 
holder  to  vote,  must  be  made,  at  least,  thirty  days  previous  to 
an  election.  Holders  of  certificates  authorized  to  be  so  issued, 
shall  be  members  of  the  association,  enjoying  the  rights  and 
privileges  thereof  and  participating  in  all  the  profits  and 
losses,  on  the  ssune^ro  rata,  from  the  date  of  the  certificate, 
whether  borrowers  or  non-borrowers. 

Sec.  12.  All  dues,  premiums,  interest,  fines  and  other 
charges  must  be  promptly  paid  off  by  the  shareholder  when 
due,  and  payments  made  shall  be  applied  in  the  following 
order:  first,  upon  charges;  second,  upon  fines;  third,  upon 
premiums;  fourth,  upon  interest,  and  fifth  upon  dues. 

Sec.  13.  Stock  on  which  the  holder  shall  fail  to  pay  the 
monthly  payments  of  dues,  fines  or  charges,  for  six  months, 
may  be  declared  forfeited  by  the  board  of  directors,  and  if 
such  dues,  fines  or  other  charges  shall  remain  delinquent  and 
unpaid  for  the  space  of  twelve  months,  then  such  shares  shall 
ipso  facto  be  cancelled,  and  such  delinquent  shareholder, 
whether  at  the  expiration  of  six  or  twelve  months,  shall  be 
credited  with  the  same  amount  as  if  he  had  voluntarily  with- 
drawn, less  all  dues,  premiums,  interest,  fines,  or  other  charges 
that  may  be  due  to  the  date  of  cancellation,  and  the  stock- 
holder, whose  shares  shall  have  been  thus  cancelled,  shall  at 
once  cease  to  be  a  member  of  the  association. 

The  amount  so  placed  to  his  credit,  either  at  six  or  twelve 
months,  shall  be  paid  to  him  or  his  legal  representative  on. 
demand,  but  shall  not  bear  interest. 


APPENDIX.  169 

Sec.  14.  All  stock  shall  be  voted  bj  shares,  one  vote  being 
allowed  each  member,  without  reference  to  the  number  of 
shares  held  by  him;  any  member,  may  authorize  another  per- 
son by  written  proxy  to  vote  his  stock,  provided,  that  all  prox- 
ies shall  be  filed  with  the  secretary,  at  or  before  the  hour  of  the 
meeting  at  which  they  are  to  be  used,  provided,  that  no  per- 
son shall  be  allowed  to  vote  more  than proxies.'     (See 

sections  5  and  6). 

At  the  annual  meetings,  the  election  shall  be  by  written  or 
printed  ballot.  All  other  questions  at  such  meetings,  or  any 
weekly  or  special  meeting,  shall  be  decided  by  a  viva  voce 
vote,  unless  a  ballot  be  demanded  by  ten  shareholders  present, 
•entitled  to  vote,  in  which  event  the  question  shall  be  decided 
by  ballot. 

Sec.  15.  Upon  the  death  of  a  stockholder,  his  legal  repre- 
sentatives shall  be  entitled  to  receive  the  full  amount  paid  in 
by  him  on  all  shares  not  borrowed  upon  or  pledged  to  the  asso- 
ciation as  collateral  security,  and  legal  interest  thereon,  first 
•deducting  all  charges  that  may  be  due  on  the  stock;  but  no 
fines  shall  be  charged  to  a  deceased  member's  account,  from 
and  after  his  decease,  unless  the  legal  representatives  of  such 
decedent  assume  the  future  payment  of  the  dues  on  the 
stock. 

Sec.  16.     The  officers  of  this  association   shall  consist  of  a 

President,  Yice-President,  Treasurer,  Attorney  and 

Directors,     They  shall  be  stock-holders,  and  be  elected  at  the 

annual  meeting  to  be  held  on  the  first after 

. . . .,  and  every  succeeding  year  thereafter. 

Sec.  17.     At  the  first  annual  meeting  for  the  election  of 

•directors,  held  on  the day  of 18 there 

shall  be  elected  three  directors   to  serve   for  one  year,   three 
directors  for  two  years,  and  three  directors  for  three  years ;  and 

annually  thereafter,  on  the day  of   of  each  year, 

there  shall  be  elected  three  directors,  to  take  the  place  of 
those  retiring  for  that  year. 

'This  last  clause  should  only  be 
used  in  case  proxies  are  iutendod. 


170 


BUILDING  ASSOCIATIONS. 


Sec.  18.  The  directors  shall  at  the  close  of  each  annual 
meeting,  or  as  soon  thereafter  as  a  full  board  has  been 
elected,  choose  from  their  number,  by  ballot,  a  president 
and  vice-president,  and  shall  in  a  like  manner  choose  from 
the  stock-holders  or  from  their  own  number,  a  secretary, 
treasurer,  attorney  and  abstracter,  all  of  whom  shall  serve 
for  one  year  or  until  their  respective  successors  are  elected 
and  qualified;  provided,  that  any  officer  may  be  removed  for 
neglect  or  malfeasance  in  his  duties,  by  a  two  third  vote  of 
the  board  of  directors. 

Sec.  19.  The  board  of  directors  shall  have  the  general 
management  of  the  affairs  of  the  association,  including  the 
granting  of  loans  and  the  acceptance  of  securities  therefor. 
They  may  employ  the  money  of  the  association,  subject  to  the 
control  of  the  stockholders,  in  any  way  consistent  with  the 
objects  of  the  association.  The  board  of  directors  may  estab- 
lish rules,  with  regard  to  •  loans,  and  with  regard  to  the  pay- 
ment, by  the  association,  of  money  to  borrowers,  upon  mort- 
gage securities,  which  rales  shall  be  printed  and  furnished  by 
the  secretary  to  stockholders,  onapplication.  Such  rules  shall 
be  binding  upon  all.  Compensation  for  services,  excepting- 
those  provided  for,  shall  be  fixed  by  the  board  of  directors. 

Sec.  20.  The  directors  shall  till  all  vacancies  in  their  num- 
ber. 

Sec.  21.  A  majority  of  the  directors  shall  constitute  a 
quorum  of  the  board.  The  office  of  any  director  who  shall 
be  absent  for  four  successive  meetings  of  the  Board,  without 
sufficient  excuse,  may  be  declared  vacant. 

Sec.  22.  It  shall  be  the  duty  of  the  president,  or  in  his 
absence,  the  vice-president,  or  in  the  absence  of  both  presi- 
dent and  vice-president,  any  director  who  may  be  elected  pro 
tem,  to  preside  at  the  meetings  of  the  stockholders  and  of  the 
board  of  directors,  and  to  sign  all  orders  for  the  payment  of 
money  authorized  by  the  board. 

Sec.  23.  The  president  shall  represent  the  association  in 
the  execution  of  all  deeds,  mortgages  and  other  contracts  in 
writino-,  and  also  in  the  release  of  mortgages  made  to  the  asso- 
ciation.    He  shall  have  the  custody  of  all  bonds  given  to  the 


APPENDIX.  171 

association  by  its  officers,  except  his  own,  if  any,  which  shall 
be  deposited  with  the  treasurer.  In  the  absence  of  the  presi- 
dent, all  his  duties  shall  devolve  upon  the  vice-president. 
In  the  absence  of  the  president  and  vice-president,  the  direc- 
tors may  select  one  of  their  number  to  preside,  with  all  the 
powers  of  the  president. 

Sec.  24.  It  shall  be  the  duty  of  the  secretary  to  attend  all 
stockholders'  meetings  and  meetings  of  the  board  of  direc- 
tors, and  enter  minutes  of  such  meetings  in  a  book  of  records 
kept  for  that  purpose,  and  to  receive  all  moneys  due  to  the 
association,  and  pay  over  the  same  to  the  treasurer,  taking  his 
receipt  therefor. 

He  shall  keep  a  correct  account  between  the  association  and 
the  stockholders,  draw  and  sign  all  orders  on  the  treasurer,  and 
attend  to  all  publications.  He  shall  be  the  custodian  of  all 
papers  and  documents  pertaining  to  the  business  of  the  asso- 
ciation, except  the  bonds  of  its  officers.  He  shall  make,  to  the 
board  of  directors,  a  statement  of  the  affairs  of  the  association, 
quarterly,  and  to  the  stockholders  annually.  He  shall  keep 
insured,  for  the  beneiit  of  the  association,  its  interest  in  any 
building  or  property  liable  to  loss  by  lire,  and  for  this  purpose 
is  authorized  to  draw  on  the  treasurer,  without  awaitintr  the 
action  of  the  directors.  Upon  retiring  from  office,  he  shall 
turn  over  to  his  successor,  within  one  week,  all  moneys,  books 
and  papers  in  his  possession,  belonging  to  the  association. 
The  secretary  shall  give  to  the  association  such  bond  as  the 
board  of  directors  may  require. 

Sec.  25.  It  shall  be  the  duty  of  the  treasurer  to  receive 
from  the  secretary  all  moneys  paid  into  the  association,  giving 
his  receipt  therefor,  and  pay  the  same  out  only  upon  orders 
signed  by  the  president  and  secretary,  or  in  absence  of  the 
president,  the  vice-president,  or  president  jpro  tem^  except  as 
provided  in  Section  24.  He  shall  keep  a  correct  account  of 
all  money  received  and  paid  by  him.  At  the  close  of  each 
semi-annual  term,  and  at  each  annual  term,  and  at  each 
annual  meeting  of  the  stockholders,  or  oftener,  if  requested  by 
the  board  of  directors,  he  shall  render  a  full  statement  of  the 
business  of  his  office.     His  books  shall  be  open  to  inspection 


172 


BUILDING  ASSOCIATIONS. 


bj  the  board  of  directors  at  all  time3.  At  the  expiration  of 
his  term  of  office,  he  shall,  within  one  week,  turn  over  to  his 
successor,  all  moneys,  books,  papers  and  other  documents  in 
his  possession  belonging  to  the  association.  .He  shall  execute  to 
the  association  such  bond  as  the  qoard  of  directors  may  require. 

Sec.  26.  It  shall  be  the  duty  of  the  attorney  to  examine  all 
abstracts  of  title  to  real  estate  offered  to  the  association  by 
way  of  mortgage,  as  security  for  loans,  and  after  such  exami- 
nation, to  certify  to  the  board  of  directors,  his  opinion  in  writ- 
ing as  to  the  title  of  such  real  estate,  and  in  his  certificate  to 
state  any  facts  within  his  knowledge,  touching  the  acceptabil- 
ity of  the  security  offered. 

He  shall  prepare  all  bonds,  notes,  mortgages  and  other 
papers  incident  to  the  making  and  securing  of  loans,  and 
cause  them  to  be  properly  executed  and  to  deliver  the  same  to 
the  secretary.  He  shall  represent  the  association  in  all  its  legal 
proceedings  in  which  it  is  a  party  or  is  interested,  and  shall 
have  power  to  enter  the  appearance  of  the  association  therein. 
In  general,  it  shall  be  his  duty  to  counsel  and  advise  with  the 
directors  and  officers  of  the  association  therein,  and  give 
proper  attention  to  all  its  business  of  a  legal  nature.  His  com- 
pensation shall  be  such  as  may  be  agreed  upon  by  him  and  the 
board  of  directors. 

Sec.  27.     The  annual  meeting  of  the  stockholders  of  the 

association  shall  be  held  on  the   ,  and  annually 

thereafter,  at  7:30  p.  m.,  at  the  office  of  the  association. 

Special  meetings  of  the  stockholders  may  be  called  by  the 
president  or  the  board  of  directors,  or  by  the  secretary,  upon 
the  application  of  ten  (10)  members  of  the  association  in  writ- 
ing, stating  the  time  and  object  of  such  meeting,  provided  that 
none  of  said  ten  members  are  in  arrears  on  any  account,  and 
provided  further  that  each  of  them  shall  have  been  sharehold- 
ers one  month.  Shareholders  representing  not  less  than  one 
tenth  (1-10)  of  the  subscribed  capital  stock  of  the  association, 
shall  constitute  a  quorum  at  any  meeting  of  the  stockholders, 
for  the  transaction  of  business. 

Sec.  28.  The  regular  meetings  of  the  board  of  directors 
shall  be  held  on  the day  of  every  month,  special  meet- 


APPENDIX.  17'^ 

ings  may  be  called  by  the  president,  whenever  the  business  of 
the  association  may  require.  Upon  the  request  of  any  three  of 
the  directors,  the  president  shall  call  a  special  meeting  of  the 
directors  at  any  time. 

Sec.  29.  On  the  first  and  third  Monday  nights  of  each 
month,  the  moneys  of  the  association  shall,  so  far  as  any  other- 
wise needed,  be  loaned  to  its  members,  at  the  rate  of  six  per 
cent,  interest  per  annum,  payable  weekly  in  advance,  the  loan  to 

be  secured  by  first  mortgage  on  real  estate  in county, 

state  of ,  and  by  tlie  transfer  to  the  association,  as  col- 
lateral of,  one  share  of  stock  for  each  three  hundred  dollars,  or 
fractional  part  thereof,  loaned,  and  by  a  transfer  of  any  insur- 
ance to  the  association,  that  the  board  of  directors  jnay 
require,  or  on  pledge  of  stock  alone. 

The  order  of  preference  in  granting  loans  shall  be  deter- 
mined by  auction  sale,  the  person  bidding  the  highest  pre- 
mium per  share,  to  be  paid  weekly,'  during  the  continuance  of 
the  loan,  to  secure  the  preferance,  and  be  entitled  to  have  a 
loan,  to  the  aggregate  face  value  of  the  number  of  shares 
named  in  his  bid. 

Sec.  30.  Bidders  for  preference  in  loans  must  state  the 
number  of  shares  they  are  bidding  upon  and  the  premium  per 
share  they  are  willing  to  pay. 

Sec.  31.  Loans  may  be  made  to  stockholders  in  sums  not 
exceeding  the  par  value  of  the  stock  held  by  the  borrower. 
Special  loans  may  be  made  to  others  than  members,  on  first 
mortgage  security,  but  loans  to  members  shall  have  the  prefer- 
ence. No  loans  will  be  made  on  personal  security  except  as 
provided  in  section  36. 

Sec.  32.  The  directors  may  require  from  successful  bidders 
for  loans,  a  deposit  of  money,  in  amount  sufficient  to  meet  the 
probable  expenses  incident  to  meet  the  examination  of  the 
security  offered  and  consummation  of  the  loan.  The  securities 
must  be  submitted  to  the  board  of  directors  by  the  proposed 
borrower,  within  two  weeks  from  the  date  of  the  acceptance  of 
the  bid,  unless  the  time  be  extended  by  the  board  of  directors. 

'In  Bome  associations  the  pre-  loan.  In  such  associations  a  change 
mium  is  deducted  at  the  time  of  the      to  that  efiect  should  be  made. 


174 


BUILDING  ASSOCIATIONS. 


Sec.  33.  In  case  any  successful  bidder  for  a  loan  shall 
refuse  to  perfect  the  same,  he  shall  pay,  as  tine  for  such 
refusal,  $2  per  share,  and  all  expenses  that  may  have  been 
incurred,  and  such  tine  and  expenses  shall  be  a  lien  upon  such 
member's  stock.  All  the  expenses  incident  to  the  making  of 
abstracts  of  title,  the  examination  of  the  same,  appraisement  of 
property,  execution  and  recording  of  instruments,  etc.,  shall  be 
paidby  the  borrower,  and  shall  constitute  a  lien  upon  his  shares. 

Sec.  34.  Shareholders  obtaining  loans  from  the  association 
must  rejrularly  and  punctually  pay  to  the  secretary,  all  fees, 
instalments,  tines  and  interest  that  shall  accrue  upon  the 
shares  pjedged  to  the  association,  and  if  the  same,  or  any  por- 
tion .thereof,  shall   remain   unpaid   for   the   period   of    

months,  it  shall  be  the  duty  of  the  board  of  directors  either 
to  sue  for  the  recovery  of  such  fees,  instalments,  fines  and 
interests,  or  such  portion  thereof  as  shall  be  unpaid,  or  to  com- 
pel payment  of  all  principal,  interest  to  date,  fees  and  tines 
due;  and  in  either  case  the  delinquent  shareholder  shall  pay 
all  expenses  incurred  by  the  Board  in  relation  thereto.  No 
shareholder,  who  is  in  arrears  for  instalments  or  fines,  shall  be 
entitled  to  a  loan.  And  in  the  event  of  suit  upon  such  loan, 
the  amount  recoverable  shall  be  the  amount  of  the  loan, 
together  with  all  arrears  and  costs,  less  instalments  paid  on 
the  member's  stock,  which  shall  be  applied  on  said  debt.  No 
interest  shall  be  paid  on  such  instalments. 

Sec.  35.  Borrowers  on  improved  real  estate  must  insure 
the  said  improvements  to  an  amount  satisfactory  to  the 
board  of  directors,  (unless  the  real  estate,  irrespective  of  the 
improvements,  be  sufiicient  security,)  at  their  own  expense 
and  have  all  policies  of  insurance  endorsed  with  a  mortgage 
clause  to  the  association,  and  deliver  said  policies  to  the  secre- 
tary, and  also  the  receipts  for  the  current  year's  premium 
thereon.  Such  policies  must  be  filed  with  the  secretary,  at 
least  three  days  prior  to  the  expiration  of  the  same,  and  if  not 
so  filed,  the  association  shall  renew  such  insurance,  and  the 
cost  thereof  shall  be  charged  to  the  borrower,  and  shall  also 
operate  as  a  lien  against  the  property  loaned  upon,  and  bear 
interest  at  the  rate  of per  cent,  per  annum  until  paid. 


APPENDIX.  175 

Sec.  36.  Any  member  may  borrow  on  his  stock  its  sur- 
render value,  the  association  deducting  the  interest  and  pre- 
mium in  advance.  Such  loans  to  be  made  for  such  time  as 
the  directors  may  see  fit. 

Sec.  37.  Any  stockholder  wishing  to  withdraw  from  the  asso- 
<iiation,  may  do  so  by  giving  . .  months  notice  in  writing  to  the 
secretary,  and  the  liabilities  to  pay  further  dues,  and  the  right 
to  dividends  shall  cease  with  said  notice,  and  he  shall  be 
entitled  to  receive  the  amount  of  dues  paid  in  on  the  stock 

withdrawn,  together  with per  cent,  interest,  for  theaverao-e 

time  accruing  fiom  the  date  of  such  notice.  Provided,  how- 
ever, he  shall  not  be  released  from  any  liability  as  a  stockholder, 
for  losses  accrued  at  the  date  of  such  notice.  Provided  fur- 
ther, that  atnotimeshallmorethanone-half  of  the  funds  m  the 
treasuryof  theassociationbe  applicable  to  the  demands  of  with- 
drawing stockholders,  without  the  consent  of  the  board  of  direc- 
tors, and  further,  that  no  stockholder  be  permitted  to  withdraw, 
whose  stock  is  held  in  pledge  as  security.  The  board  of 
directors  shall  have  the  power  to  provide  for  involuntary 
withdrawals  of  stock,  whenever,  in  their  opinion,  the  best 
interests  of  the  association  require  it,  but  the  stockholders 
thus  compelled  to  withdraw,  shall  receive  the  full  profits,  as 
shown  by  the  statement  of  the  association  next  preceding 
such  action,  with  all  instalments  of  dues  on  stock.  This  shall 
not  apply  to  pledged  stock. 

Sec.  38.  Upon  the  death  of  a  stockholder,  his  legal  lep- 
resentatives  shall  be  entitled  to  receive  the  full  amount  paid 
in  by  him  as  dues  on  his  stock,  and  such  dividends  as  may 
have  been  declared  upon  such  stock,  first  deducting  all  charges 
that  may  be  due  on  the  stock.  No  fines  shall  be  charged  on  a 
deceased  member's  account,  unless  the  legal  representatives  of 
such  decedent  assume  the  future  payment  upon  such  stock. 

Sec.  39.  A  borrowing  stockholder,  who  is  not  in  arrears 
for  dues,  interest,  fines  or  assessments,  may  repay  his  loan  at 
any  time,  and  at  the  same  time  withdraw  from  the  association, 
upon  paying  the  amount  of  his  loan,  less  the  surrender  value 
of  his  stock,  as  fixed  in  section  37,  and  upon  surrendering  to 
the  association  for  cancellatiou,  the  stock  held  by  him.     And 


176 


BUILDING    ASSOCIATIONS. 


thereupon  he  shall  receive  from  the  association  the  surrender 
of  his  note  and  mortgage,  or  other  evidence  of  his  loan,  and  a 
satisfaction  and  release  of  mortgage. 

Sec.  40.  The  president  shall  appoint  an  appraising 
committee  from  among  the  stockholders,  consisting  of  three 
members.  It  shall  be  the  duty  of  the  committee  to  visit 
property  offered  to  the  association  as  security  for  loans,  to 
acquaint  themselves  with  the  cash  value  of  such  property,  and 
make  report  thereof  in  writing,  to  the  board  of  directors,  at 
their  next  meeting. 

The  appraisers  shall  receive  such  fees  as  the  board  of  direc- 
tors may  determine  upon.  Ko  fee  shall  be  paid  to  an 
appraiser  who  has  not  personally  visited  the  property. 

Sec.  -it.  The  president  shall  appoint  two  persons,  who 
shall  constitute  an  auditing  committee,  who  shall  make  an 
examination  of  the  books,  accounts  and  affairs  of  the  associa- 
tion, semi-annually,  and  whose  services,  in  making  the  exam- 
ination, may  be  properly  compensated. 

Sec.  42.  The  president  shall  appoint  a  building  inspector. 
It  shall  be  the  duty  of  this  inspector  to  exercise  a  general 
supervision  over  all  buildings  erected  with  funds  borrowed 
from  the  association,  and  to  make  such  reports  to  the  board 
of  directors  as  may  be  required  by  the  board.  The  building 
inspector  may  be  paid  such  fees  by  the  association  as  may  be 
fixed  by  the  board  of  directors. 

Sec.  43.  Every  member  neglecting  to  pay  regularly  the 
dues  shall  pay  a  fine  of . . . .  cents  per  share  for  each. . . .  week 
(or  month)  of  such  neglect. 

Sec.  44.  'The  secretary  shall,  at  the  end  of  every  six  (or 
twelve)  months,  calculate  the  earnings  of  the  association,  and 
said  earnino:3  shall  be  used  as  follows: 


'  This  section  is    proper  if  the 
association    is  a   permanent    one. 


Otherwise  omittod. 


APPENDIX.  177 

(a)  For  the  payment  of  all  expenses. 

(b)  Such  an  amount  as  the  board  of  directors  shall  deter- 
mine to  be  placed  in  the  reserve  fund. 

(c)  The  balance  shall  be  credited  to  the  account  of  the 
members,  according  to  their  average  investment,  whether  they 
have  drawn  money  or  not,  and  shall  be  paid  upon  with- 
drawal. 

(d)  No  dividends  shall  be  declared  on  dues  paid  in 
advance. 

^Sec.  45.  When,  and  so  soon  as  the  shares  of  any  series 
shall  have  attained  the  value  of  two  hundred  dollars,  the  Di- 
rectors shall  call  a  meeting  of  the  stockholders  of  that  series, 
at  which  meeting  stockholders  who  have  not  pledo-ed  their 
shares  shall  receive  the  value  thereof,  after  deducting  any 
fines  that  may  be  due  thereon,  and  stockholders  who  have  bor- 
rowed shall  have  their  securities  released  and  returned  to  them 
and  shall  surrender  their  stock  to  the  association  :  Provided 
that  no  stockholder  shall  be  entitled  to  have  his  or  her  secur- 
ities released,  or  liens  against  him  or  her  satisfied  until  he  or 
she  has  fully  paid  all  fees,  instalments,  fines  and  interest,  and 
all  charges  that  he  or  she  may  owe  to  the  association. 

'Sec.  46.  Any  member  of  this  association  who  shall 
make  a  loan  with  the  association  for  the  purpose  of  build  in  o- 
or  purchasing  improved  property,  and  who  shall  pass  a  satis- 
factory examination  for  life  insurance,  in  a  life  insurance  com- 
pany named  by  this  association,  by  paying  as  a  part  of  the 
monthly  premium  upon  liis  loan,  the  amount  necessary  to  pay 
the  premium  upon  his  policy  of  life  insurance  on  his  life,  and 
in  favor  of  the  association,  shall  receive  from  the  association 

'Used   if   association     is    serial;  bers    on  the   instalment  premium 

otherwise  omitted.  plan    is   popular  and    it    presents 

*If  lifo  insurance  is  desired,  this  strong  advantages  of  security  for 

section  is  proper.      In  some  places  the  family  of  the  borrower  and  the 

life  insurance  for  borrowing  mem-  association. 

12 


178 


BUILDING    ASSOCIATIONS. 


an  agreement  or  guarantee,  that  in  case  he  shall  keep  np  his 
monthly  payment  of  dues,  premiums,  interest,  lines  and  other 
charges,  from  month  to  month,  when  due,  including  the 
amount  necessary  to  keep  up  his  policy  of  life  insurance  as 
stated  herein,  that  if  he  shall  die  before  the  repayment  of  the 
loan  or  the  maturity  of  the  shares  loaned  upon,  the  association 
will  pay  oS  the  loan  upon  his  shares,  and  will  cancel  the 
mortgages  or  deeds  of  trust  securing  the  same,  leaving  to  the 
estate  the  share  or  shares  of  stock  owned  by  such  shareholder 
at  the  time  of  his  death,  unpledged  and  continuable,  or  with- 
drawable at  the  option  of  the  heirs,  said  loan  not  to  be  can- 
celled, however,  until  such  proof  of  death  has  been  made  as 
shall  be  satisfactory  to  the  life  insurance  company  holding  the 
policy  of  insurance  upon  the  life  of  the  shareholder  aforesaid. 
The  conditions  of  the  foregoing  section  are  to  be  embodied 
in  the  mortgage  or  deed  of  trust,  given  by  the  borrower  to 
secure  the  loan  made  to  him,  and  the  faithful  fulfilment  of 
all  of  the  conditions  of  same  on  his  part,  to  be  made  a  condi- 
tion precedent  to  the  guarantee  of  the  association. 

Sec.  47.  The  expenses  shall  be  ....cents  per  week  per 
share  (or  shall  be  deducted  from  the  profits  before  any  divis- 
ion is  made),  and  shall  be  incurred  only  by  authority  of  the 
board  of  directors. 

Sec.  48.  The  seal  of  the  corporation  shall  consist  of  the 
name  and  location  of  the  association,  and  the  date  of  its  char- 
ter, the  whole  to  be  surrounded  by  an  ornamental  circular 
border.  It  shall  be  produced  by  a  single  impression  of  an 
embossing  press.  It  shall  be  in  the  custody  of  the  President, 
and  he  shall  see  that  it  is  afiixed  to  all  ofiicial  papers  that  re- 
quire it.  The  president  may  delegate  custody  of  the  seal  to 
the  secretary. 

Sec.  49.  In  case  a  deposit  book  is  lost  or  stolen,  immediate 
information  of  the  same  must  be  given  to  the  secretary.  As 
the  officers  of  this  association  may  be  unable  to  identify  every 
shareholder,  when  the  shareholder  fails  to  notify  the  officers 
that  his  deposit  book  has  been  lost  or  stolen,  the  association 


APPENDIX.  179 

will  not  be  responsible  for  loss  sustained,  if  his  shares  shall  be 
fraud  aleutl  J  withdrawn  by  another,  provided,  that  incase  of 
the  alleged  theft  or  loss  of  a  deposit  book,  the  Executive  Com- 
mittee may  at  their  discretion  authorize  the  issue  of  a  dupli- 
cate, or  may  authorize  the  payment  of  the  shares  without  the 
deposit  book,  if  withdrawn  in  full,  but  shall  in  either  case  re- 
quire a  bond  to  indemnify  the  association  for  any  loss  it  may 
sustain  on  account  of  the  lost  or  stolen  deposit  book. 

Sec.  50.  The  by-laws  may  be  amended  by  a  two-thirds  vote 
of  the  directors  present  and  voting  at  a  regular  or  special 
meeting,  provided  that  the  proposed  amendment  shall  have 
been  submitted  by  the  association  in  writing,  at  a  meeting 
neld  at  least  four  weeks  previous  to  action  on  the  same. 
Notice  of  each  amendment  given  to  each  member  at  his  last 
place  of  residence,  as  shown  on  the  books  of  the  association, 
by  mail,  shall  be  sufficient. 


The  following  application  completely  presents  a  loan  before 
the  directors.  The  vital  point  in  the  life  of  the  association  is 
in  its  securities,  and  too  much  care  cannot  be  exercised  in 
guarding  all  points,  one  of  which  is  the  application.  Too 
many  societies  are  careless  in  this  matter,  and  if  trouble  fol- 
lows, it  is  often  traceable  to  this  as  its  source. 

Application  for    a  Real  Estate    Loan  from  the 
Association. 

I do  hereby  make  application  for  a  loan  of 

Dollars,  to  bear  interest  at  the  rate  of . . .  .per  cent  per  annum, 

and  a  premium  of payable  on  or  before  the day 

of ;  all  payments  to  be  at  such  place  as  the  lender 

may  direct;  and  to  secure  the  same. . .  .hereby  agree  to  assign 
and  transfer shares  of  the  capital  stock  of  said  associa- 
tion, owned  by as  collateral  security,  and  to  give  a  first 


180 


BUILDING     ASSOCIATIONS. 


mortgage  on  the  real  estate  set  forth  in  the  following  qnes- 
tions  and  answers: 

1.  Name  of  applicant  (State  surname  and  christian  name 
in  full) 

2.  "What  is  your  Post  Office  address  ? 

3.  Are  you  married  ? 

4.  Give  full  name  of  husband  or  wife 

5.  What  is  your  occupation? 

6.  How  long  has  this  been  your  occupation? 

7.  What  was  your  occupation  previous  to  this  time?.,.. 

8.  State  acre  of  each  husband ....  wife 


9.  What  is  your  regular  monthly  income,  and  from  what 
source  do  you  obtain  it 

State  full  particulars  as  to  source  and  amounts. 

10.  How   many  persons   are    dependent    upon   you    for 
support  ? 

11.  In  whom  is  the  title  to   the  real   estate  on  which  the 
loan  is  asked? 

12.  What  is  the  description  of  the  property  according  to 
the  deed  ? 

13.  What  is  the  size  of  the  ground?. . .  .ft.  by ft.,  on 

Street,  between Street    and Street. 


14.  Is  the  ground  above  or  below  grade?. 

15.  How  much? 


16.     What  is  the  distance  from  the  business   center  of  the 
town? 


APPENDIX..  181 

17.  Improvements  now  on  the  premises.     Foun- 
dation, wood,  brick,  or  stone? Solid  wall  or   pillars? 

Building  on  foundation;  frame,  brick  or   stone?. . . . 

Stories  hiirb?. ..  .How    long  built? How  many  rooms? 

Bath  room? Hard  or  soft  wood  finish? 

Size  of  house  on  the  ground  ? ....  ft  by ....  ft Well  ? .... 

Cistern? City   water? Sewer? Furnace? 

Gas? Grates? Shutters? Kind  of 

roof? Size  and  description  of  cellar? Is  house 

all  finished? ...In  what  repair? Is  the  house 

painted? How  many  coats?. . .  .Fence?. .  ..Side- walk? 

Out  house? Stable? Yalue? Other   im- 
provements?   Give  date  of  last  improvement  and  what 

they  were For  what  purpose  is  the  property   used? 

In  what  direction  does  the  house  front?. ....... 

18.  Improvements  to  be  built.     Kind  of  foundation. 

Wood,  brick  or  stone? Solid  walls  or  pillars? 

Fuilding  on  foundation;  log,  frame,  brick  or  stone? 

stories  high? Is  the  house  painted? How  many 

coats?. . .  .Plastered? No.  coats  and  skim  coat? 

No.  of  rooms  ? Bathroom  ? Hard  or  soft  wood 

finish? Well? Cistern? City   water? 

Sewer? Furnace? Shutters? 

For  what  purpose  is  the  property  to  be  used? Gas? 

Grates? Size  of  cellar? Kind  of  walks? 

Good  fence? Size  of  house  on  ground? 

ft.  by.... ft 

19.  What  kind  of  flues  in  the  house? In  what 

direction  does  the  house  front? 


20.  Have  you  a  barn? Size  on  the  ground? 

Height  of  corner  posts  ? 

21.  Yalue  in  cash  of  the  barn?  $ 

22.  Of  what  material  and  in  what  repairs  are  the  fence?. , 


182  BUILDING  ASSOCIATIONS. 

23.  Sidewalks? ^ 

24.  What  other   buildings   or  improvements    are    there 
besides  those  already  mentioned? 

25.  Give    date   of   last    improvements    and    what    were 
thej? 


26.  State  particulars  as  to  trees  and  shrubbery?. 

27.  How  long  have  you  owned  the  property?. . . 

28.  How  much  did  you  pay  for  it? 

29.  Did  you  pay  cash  or  did  you  trade  for  it?. . , 

30.  Is  it  all  paid  for? 

31.  If  not,  state  how  much  is  unpaid? 


32.     Do  you  agree  to  carry  approved  lire  insurance  equal 
in'lamount  to  the  loan? > 


33.  Is  the  property  rented?. 

34.  How  much  per  month?. 


35.  Have  you  ever  applied  for  a  loan  on   this  property? 
'If  BO,  from  whom  ? What  result  ? 

36.  If  occupied  by  a  tenant  how  much  would  it  bring  per 
month  ? 

37.  What  is  the  value  of  the  ground  without  the  improve- 
ments?  What  is  the  value  of  the  improvements  in 

their  present  condition?. 

38.  What  is  the  estimated  cost  of  the  improvements  to  be 
made? 

39.  Is  the  title  perfect  in  applicant? 

40.  The  property  is  assessed  for  taxes ;  ground  $ 


APPENDIX.  183 

Improvements  $ Are  taxes  all  paid  to  date? 

41.  Is  the  sidewalk  in  front  of  the  property  curbed  and 
paved? 

42.  Is  the  bed  of  the  street  paved? 

43.  Are  gas  pipes  laid  in  the  street? 

44.  Are  water  pipes  laid  in  the  street? 

45.  Is  the  property  incumbered  in  any  way  by  mortgage  or 
mechanic's  liens,  unpaid  taxes,  judgments,  suits  pending  or 
liens  of  any  kind?  If  so,  state  the  nature,  date,  maturity,  and 
amount  of  incumbrance  and  by  whom  held. 

46.  Can  the  liens  on  the  property  be  paid  now? 

47.  For  what  purpose  is  the  money  borrowed? 

48.  Do  you  wish  this  loan  to  be  made  in  installments  as 
the  building  progresses  or  on  completion  of  the  improve- 
ments? 

49.  Does  your  wife  consent  to  join  in  the  bond  and 
mortgage? 

50.  What  could  the  property  be  sold  for  now  in  cash  ? 

51.  What  would  it  bring  at  forced  sale  now? 

52.  What  is  the  cash  value  of  all  the  property  owned  by 
you?    Real  estate personal 

53.  What  are  your  total  liabilities  at  this  time? 

If  this  application  is  accepted,  I  will  furnish,  at  my  own 
expense,  a  com])lete  abstract  of  title  to  the  land  proposed  as 
security,  and  have  the  same  certified  to  be  correct  by  the 
proper  party,  which  abstract  shall  be  brought  down  to  a  date 
subsequent  to  the  approval  of  my  application  for  the  loan,  and 


184 


BUILDING  ASSOCIATIONS. 


show  a  clear  and  perfect  title  in  the  applicant.  I  agree  to  pay 
the  expenses  of  examination  and  appraisement  of  the  property 
and  for  examining  the  title  and  recording  the  mortgage  and 
making  of  the  papers. 

The  secretary  of  the  association  is  hereby  authorized  to 
procure  an  abstract  of  the  property  herein  offered,  as  security, 
and  a  policy  of  insurance  on  the  buildings  thereon,  unless  the 
same  shall  be  furnished  by  me  as  soon  as  required  by  the 
board  of  directors,  or  the  rules  of  the  association,  and  to  deduct 
the  cost  of  the  same  from  the  proceeds  of  the  loan,  together 
with  all  other  costs  or  indebtedness  connected  therewith,  and 
to  pay  therefrom  any  judgments,  taxes,  liens  or  incumberances 
of  any  kind  whatever,  which  may  exist  against  the  property  at 
the  time  of  closing  the  loan;  and  if  this  is  a  building  loan,  I 
ao-ree,  before  any  payments  are  made  on  the  same,  to  furnish 
the  secretary  a  complete  list  of  all  contractors,  or  sub-contrac- 
tors, or  parties  furnishing  material  or  work  for  the  said  build- 
ino-s,  too-ether  with  the  amounts  of  their  several  claims,  and 
their  signatures,  waiving  all  senior  rights  of  Ilea,  for  any 
amounts,  in  excess  of  the  same,  unless  my  contractor  furnishes 
a  satisfactory  idemnifying  bond  to  the  said  association.  I  also 
ao-ree  to  be  governed  by  rules  in  force,  concerning  loans,  a  copy 
of  which  I  acknowledge  receipt. 

The  applicant  herein  warrants  that  the  representations  above 
made  are  true,  and  agrees  that  they  shall  form  a  part  of  the 
consideration  of  a  mortgage,  which  may  hereafter  be  executed 
by  said  applicant  to  said  association,  to  secure  such  loan  as 
may  be  granted,  and  if  there  is  any  misrepresentation  in  said 
application,  it  shall  operate  as  a  default  in  conditions  of  said 
mortgage,  and  render  the  debt  due  and  the  mortgage  may  be 
foreclosed. 


APPRAISER'S  REPORT. 

'^ '   {-83. 

(JOUNTY  ) 

We,  the  undersigned,  do  solemnly  swear  that  we  are  all  well 


State  of 


APPENDIX.  185 

acquainted  with  the  value  of  real  estate,  described  in  said  appli- 
cation, and  with  the  property  described  in  the  within  appli- 
cation, and  that  the   ground  without  improvements  is  worth 

in  cash  $ ,  and  the  buildings  are  worth  iacash  $ ,  and 

the  improvements  to  be  made  will  cost   dollars.     The 

property  would  bring  at  forced  sale,  in  cash,   at  the  present 

time,  ^ We    are    also    personally    acquainted    with 

,   mentioned    in    the    within   application,   and 

believe  him  to  have  good  standing  and  credit.  AVe  regard 
as  a  prompt,  upright,  reliable  person,  pecuniarily  respon- 
sible for contracts,  and  we  believe  that  he  will  prompt- 
ly meet  all  payments  of  principal  and  interest  on  the  loan 
herein  applied  for.  AVe  believe  this  property  is  adequate 
security,  with  improvements,  present  and  proposed,. for  a  loan 

of  $ We  are  not  interested  in  said  premises,  nor  in  the 

result  of  this  application  for  a  loan. 

Signed, 

,  [SEAL.l 

(Notarial  Certificate.)  ,  [seal.] 

Rules  of  Saving:  and  Loan  Association,  governing 
the  bidding  for  loans,  the  manner  of  making  payments  to 
builders  and  other  information  for  borrowing   stockholders. 

1.  The  regular  periods  for  the  sale  of  money  are  the  nights 
in  each  month,  prescribed  in  the  by-laws. 

2.  Bidders  for  preference  in  loans  mnst  state  the  number 
of  shares  they  are  bidding  upon  and  the  amount  per  share 
they  are  willing  to  pay. 

3.  Immediately  upon  the  acceptance  of  his  bid,  each  appli- 
cant shall  pay  into  the  hands  of  the  secretary  the  sum  of ... . 
dollars,  to  be  paid  to  the  members  of  the  ap])raising  com- 
mittee, for  services  in  appraising  property  within  the  corpo- 
rate limits  of ...  .or. ..  .dollars  for  like  services  outside  of 
said  limits:  The  proposed  borrower  should  promj)tly  call  at 
the  office  of  the  attorney  of  the  Association,  taking  with  him 
his  abstract  to  title  to  the  real  estate  to  be  offered  as  security; 


186 


BUILDING  ASSOCIATIONS. 


in  case  he  has  no  abstract  of  title  he  should  take  his  deed;  at 
the  attorney's  office  a  written  application  and  all  necessary 
legal  papers  will  be  prepared. 

4.  The  fees  of  the  attorney,  notary,  abstracter,  county 
recorder,  and  insurance  premiums,  shall  be  noted  on  the  first 
warrant  drawn  in  favor  of  the  borrower,  and  be  retained  for, 
and  paid  to  them  by  the  treasurer  from  the  amount  so  drawn, 
unless  sooner  paid  from  the  private  funds  of  the  borrower. 

6.  The  payment  of  premium  and  interest  shall  begin  with 
the  date  of  execution  of  bonds  and  mortgages  to  the  Association. 


5.  On  the  receipt  of  the  written  certificate  of  the  attornev, 
that  title  to  security  offered  for  a  loan  is  perfect,  and  all  legal 
requirements  having  been  complied  with  by  the  borrower,  the 
secretary  shall  draw  warrants  in  favor  of  the  person  to  whom 
the  loan  is  made,  for  amount  not  exceeding  cash  in  hands  of 
the  treasurer,  and  be  subject  to  the  conditions  preceding  and 
following  this  rule. 

7.  Should  the  borrowing  member  desire  to  build  upon  or 
improve  his  property,  the  money  may  be  advanced  in  install- 
ments  as  the  work  progresses;  but  no  money  shall  be  paid 
until  the  plans  and  specifications  for  the  work  have  been 
submitted  and  approved,  and  a  contract  or  contracts  have  been 
made  with  responsible  parties,  said  parties  in  all  instances  to 
execute  a  good  and  satisfactory  bond,  conditioned  to  indem- 
nify the  Association'  from  any  and  all  loss  that  may  arise 
from  said  improvements,  by  reason  of  mechanics  or  other 
liens.  Should  the  borrowing  member  however,  desire  to  make 
more  extensive  improvements  than  called  for  by  the  amount 
of  money  borrowed,  he  will  be  at  liberty  to  do  so  by  pajing^ 
the  said  extra  improvements,  prior  to  any  payment  made  by 
the  board  of  directors,  and  shall  furnish  receipts  showing 
proper  expenditure  of  the  same  to  the  secretary. 

8.  The  money  shall  be  advanced  in  installments  as  follower 
The  first  payment  when  the  property  is  secured  and  foundatioa 


APPENDIX.  187 

completed  and  the  contract  or  contracts  are  signed  as 
above,  and  indemnifying  bond  given  as  above  provided.  The 
second  payment  when  the  frame  is  up  and  the  building  en- 
closed. The  third  payment  when  the  plastering  is  on.  The 
last  payment  when  the  house  is  finished. 

9.  No  building  shall  be  considered  finished  until  a  good 
supply  of  water  is  provided. 

10.  The  manner  of  making  payments,  however,  may  he 
changed  by  the  board  of  directors  so  as  to  meet  the  require- 
ments in  special  cases. 

11.  The  payments  must  be  so  arranged  that  at  least  one 
fourth  of  the  whole  amont  of  the  loan  shall  be  retained  for 
the  last  payment. 

12.  A  bidder  failing  to  perfect  his  loan  for  a  period  of 
thirty  days  after  the  date  of  his  bid,  shall  incur  the  penalties 
provided  for  in  Section  33  of  the  by-laws  of  this  Association. 

13.  Borrowers  on  stock  securities  will  be  governed  in  all 
respects  by  the  provisions  of  Sec.  36,  of  the  by-laws  of  this 
Association. 

14.  Loans  shall  not  in  any  case  exceed  66f  per  cent  of  the 
value  of  the  security  offered,  after  completion  of  all  contracts 
on  the  part  of  the  borrower. 

15.  The  board  of  directors  reserve  the  right  to  strike  out, 
amend,  modify  or  change  any  of  their  rules,  whenever  deemed 
by  it  advisable  so  to  do. 

MORTGAGE  NOTE. 

189.. 

For  value  received,  I,  we,  or  either  of  us,  promise  to  pay  to 

the Association,  of   ,  the   sum   of 

dollars,  with  interest  at  the  rate  of  ....  per 

cent  per  annum,  from  date  until  paid,  and  attorney's  fees. 


II 


BUILDING  ASSOCIATIONS. 


The  said  interest  and  premiums  to  be  paid  in instal- 
ments, on  or  before  tlie  ....  day  in  each  . . . .,  from  and  after 
this  date.  And  as  collateral  security  for  this  note,  . .  hereby 
transfer  and  assign  ....  shares  of  the  capital  stock  of  said 
association  and  agree  to  pay  dues,  lines  and  other  charges  on 
said  stock,  as  provided  in  the  by-laws  of  said  association. 

This  note  to  be  due  when  such  stock  matures,  as  provided 
in  the  by-laws  of  said  association,  and  such  matured  stock  may 
be  applied  in  full  payment  thereof. 

BOND.    GENERAL.  FORM. 

This  form  of  bond  may  be  used  in  those  states  where  a  form 
is  not  herein  given  for  a  state,  and  has  been  prepared  after  con- 
sulting bonds  used  in  different  states. 

Know  all  men  by  these  present,  that   

,  of county,  in  the  State  of , 

held  and  firmly  bound  unto  the Association,  of 

,  in  the  sum  of   ....    hundred  dollars,  together  with 

ten  per  cent  attorney's  fees,  which  well  and  truly  to  be  paid, 

bind  ....  heirs,  executors  and  administrators  firmly  by 

these  presents. 


Sealed  with 
189... 


seal  and  dated  this 


day  of 


The  conditions  of  this  obligation  are  such;  That  whereas, 

the  above  bounden  obligor, ,  has  subscribed 

for shares  of  the  capital  stock  of  $ ,  each  in  said 

association,  for  which  share. .  of  stock. .  he  received  from  said 

association  the  sum  of    hundred  dollars,  as  a  loan, 

which  shares  of  stock  are  hereby  transferred  as  collateral 
security  for  the  payment  of  this  bond,  with  agreement  on ... . 
part  that  . .  he  . .  will  continue  to  pay  ....  dues  on  the  said 
shares  of  stock,  at  the  rate  of  ....  cents  per  ....  on  each 
share,  together  with  a  premium  of   per  ....  on  each 


APPENDIX.  189 

share  of  stock,'  and  interest  on  said  loan  at  the  rate  of  ... . 
per  cent  per  annum,  all  payable  on  or  before  the  ....  day  of 
.  . . . ,  until  such  share . .  mature,  as  provided  by  the  by-laws  of 
said  association ;  also,  pay  all  lines  and  assessments  on  such 
shares,  as  provided  for  in  said  by-laws.  All  payments  of 
money  hereunder  shall  be  made  at  the  office  of  the  association, 
in  the  city  of 

Now,  if  the  above  bounden  obligor  shall,  well  and  truly 
keep  and  perform  said  bond  in  every  part,  without  fraud 
or  delay,  then  the  above  obligation  to  be  void  and  of  no 
effect,  but  if  default  be  made  in  any  part  thereof,  then  the 
above  bounden  obligor  is  to  forfeit  all  the  premiums,  fines, 
assessments  and  intei-est  so  paid  into  said  association,  and  pay 
back  said  loan,  less  all  such  dues  credited'  thereon.^ 

All  payments  of  money  hereby  secured,  shall  be  made  with- 
out relief,  from  valuation  or  appraisement  laws. 

MORTGAGE.  GENERAL,  FORM. 

The  following  form  of  mortgage  may  be  used  in  the  states, 
other  than  those  where  the  forms  are  hereinafter  given.  It  has 
been  prepared  after  consulting  the  forms  in  use  in  the  differ- 
ent states:  ■ 


This  indenture  witnesseth;  That 


'In    associations  in    New    York,  bond,  to  appear  for the  said... 

where  the  premium  is  deducted  at  heirs,  executors  or  ad- 

the  time  of  making  the  loan,  this  ministrators,  at  the  suit  of  the  said 

clause  is  omitted.  corporation,   its    successors    or    as- 

*0r  the  surrender  value  of   the  signs,  on  the  above  obligation,  as  of 

stock.  any  term  prior  or  subsequent  to  the 

»In  Delaware  the  following  clause  date  hereof,  and  thereupon  to  con- 
is  added:  fess  judgment  for  the  above  sum  of 

And do  hereby  authorize  and  dollars  debt,  besides 

empower  any  clerk,  prothonotary  or  cost  of  suit,  by  non  sum  informntus, 
attornpy  of  any  court  of  record,  in  nihil  (licit,  or  otherwise,  with  stay 
America,  or  elsewhere,  in  case  of  of  execution  until  the  day  of  pay- 
default   in  the  conditions  of  said  ment. 


190 


BUILDING  ASSOCIATIONS. 


(or    do   grant,  bargain,  sell,  convey  and    confirm  unto)*    of 
county.  State  of ,  mortgage  and  war- 


rant to  the Association,  a  corporation  incorpo- 
rated and  existing,  by  virtue  of  the  laws  of  the  State  of , 

the  following  real  estate,  situated  in county,  State 

of ,  and  described  as  follows,  to  wit: 


together  with  all  and  singular  the  tenements,  hereditaments 
and  appurtenances  thereunto  belonging,  or  in  any  wise  apper- 
taining, for  its  own  use,  benefit  and  behoof  forever. 

This  mortgage  is  intended  and  executed  as  security  for  the 
performance  of  the  stipulations  and  agreements  of  a  certain 

bond''  of  eveii  date,  herewith  executed  by  said , 

as  obliofor  to  said  association,  in  the  sum  of hundred 

dollars,  which  is  a  just  and  full  loan,  made  to  said , 

under  the  rules  and  by-laws  of  said  association,  at  an  author- 
ized meeting  of  the  board  of  directors,  upon  a  certain  written 
application  therefor,  by  said  . . . . ,  which  application  is  made  a 

part  of  this  mortgage.     Conditioned,  that  the  said 

shall   continue   to  pay  monthly  dues  upon   ....    share.,  of 

$ ,  each  of  the  capital  stock  of  said  association,  at  the 

rate  of  ....  cents  per on  each  share  of  stock,  and  .... 

premium  per  ....  on  each  share  of  stock,  and  interest,  od 
said  loan,  at  the  rate  of  ....  per  cent  per  annum,  all  payable 

on  or  before  the day  of  each   ,  until  such  share. . 

mature,  as  provided  by  the  by-laws  of  said  association ;  also 
pay  all  fines  and  assessments  on  said  shares,  as  provided  in 
said  by-laws,  and  to  pay  all  money  herein  provided  for,  at  the 
office  of  the  association,  in  the  city  of 

And  it  is  further  agreed,  if  the  said  obligor ....  shall  well 
and  truly  keep  and  perform  said  bond  in  every  part,  then 


'Instead  of  "mortgage  and  war- 
rant'' this  clause  is  used  in  the  fol- 
lowing states:  North  Carolina, 
Kansas,  Oregon,  North  Dakota, 
Arkansas,  Connecticut,  Nebraska, 
Wisconsin,  Maine,  Florida,  Rhode 
Island  and  Wyoming. 


*If  a  note  is  used  as  in  California, 
Oregon  and  New  Mexico.the  clauses 
identifying  the  bond  should  be 
omitted  and  the  note  (see  form)  in- 
corporated in  full. 


APPENDIX.  191 

said  bond  to  be  void  and  of  no  effect,  and  tliis  mortgage  shall 
be  cancelled;  but  if  default  be  made  in  any  part  thereof,  the 
above  obligor. ..  .to  forfeit  all  the  premiums,  fines,  assess- 
ments and  interests  so  paid  into  said  association  and  pay  back 
said  loan,  less  all  dues  credited  thereon. 

The  mortgagor. .,  further  agree,  .to  keep  such  mortgaged 
premises  in  good  repair,  to  pay  all  taxes,  assessments  and 
charges  thereon  as  the  same  become  due,  not  commit  or  suffer 
any  waste  of  said  property,  and  to  keep  the  improvements  on 
said  real  estate  insured  in  some  responsible  insurance  com- 
pany, to  the    satisfaction  of  the  board  of  directors    of  said 

Association,  in  the  sum  of  $ for  the  benefit  of  said 

Association,  and  to  transfer  such  insurance  to  said  association, 
and  deliver  the  policies  for  said  insurance  to  said  association, 
to  be  held  as  collateral  security  until  the  loan  is  fully  paid. 
In  the  event  said  mortgagor . . .  fail . .  to  pay  said  taxes  or  assess- 
ment, or  keep  said  property  insured,  said  association  may  do 
so,  and  the  cost  thereof,  with ....  per  cent  interest,  shall  be 
collectible  under  this  mortgage. 

The  mortgagor ....  further  agree. ..  .that  upon  default  of 
any  of  the  conditions  of  this  mortgage,  or  of  said  bond,  in  any 
part  thereof,  for  a  period  of ,said  bond  shall  with- 
out notice  (notice  being  hereby  expressly  waived),  at  the  option 
of  the  board  of  directiors  of  said  association,  be  and  become 
'due  and  collectible,  either  by  suit  upon  said  bond,  or  by  the 
■foreclosure  of  this  mortgage;  and  upon  such  default  occur- 
ring, it  is  agreed  that  the  mortgagee  shall  have  possession  of 
the  said  premises  during  the  redemption  year,  and  a  receiver 
.may  be  appointed  to  take  possession  of  the  said  premises,  for 
•the  purpose  of  applying  the  rents  and  profits  thereof  to  the 
payment  of  the  debt  secured  by  this  mortgage,  which  receiver- 
ship shall  continue  from  date  of  such  default  until  the  said 
premises  shall  be  redeemed  according  to  law,  or  until  such 
year  expires. 

It  is  further  agreed,  that  all  of  said  payments  herein  men- 
tioned, shall  be  made  without  relief  from  valuation  and  ap- 
praisement laws,  waiving  and  releasing  homestead  exemption 


192  BLriJLDING    ASSOCIATIONS. 

laws.  All  moneys  payable  under  this  mortgage  may  at  any- 
time be  required  in  gold  coin  of  the  United  States.  No  failure 
to  exercise  this  right  by  the  mortgagee  shall  operate  as  the 
waiver  thereof. 

^  And  the  said  mortgagor for heirs,  executors   and 

administrators,    covenant ....  and    agree that he  ... . 

well  seized  of  the  premises  conveyed,  as  of  a  perfect,  absolute 
and  indefeasible  estate  of  inheritance  in  fee  simple  absolute, 

and  ha good  right,   full  power,  and  lawful  authority  to 

grant,  bargain,  sell  and  convey  the  same  in  manner  and  form 
aforesaid,  and  that  the  same  are  free  and  clear  of  all  incum- 
brances, and  that . . . ,  he . .  .  will  forever  warrant  and  defend  said 
land,  unto  said  mortgagee  or  its  assigns,  against  all  claims  to 
the  same. 

The  said wife  of  said  mortgagor,  by  join- 
ing in  this  mortgage,  relinquishes  all  her  interest  in  said  prop- 
erty, as  against  the  said  association. 

In  witness  whereof,  said  mortgagor.,  ha.,  hereunto  Bet 
hand . .  and  seal . .  this day  of 18     . 


The  acknowledgment  by  the  mortgagors  should  follow,  and, 
as  its  form  depends  upon  the  law  of  each  state,  governing 
acknowledo-ments  to  instruments  for  record  in  such  state,  and 
differs  in  many  states,  no  form  is  here  given."  It  is  easilj 
ascertainable  from  any  conveyancer. 


'This  clause  is  added  in  the  forms  shire,   Minnesota,    South  Carolina, 

used  in  the  following  states :    North  Oregon,  Ohio,  Georgia,  New  York, 

Carolina,    Kansas,   Oregon,    North  North  Carolina,  (Alabama  and  Penn. 

Dakota,      Arkansas,      Connecticut,  sylvania,  where   party  is  unable  to 

Nebraska,  Wisconsin,  Maine,   Flo-  -write),  Colorado,  Connecticut,  Flori- 

rida,  Rhode  Island  and  Wyoming.  da,  Idaho,  Lousiana,  Michigan,  Ne- 

*In  the  following  states  and  terri-  braska,  Rhode   Island,  for   married 

tories  the  signing  of  a    mortgage  woman,   Utah,  Vermont,   "Virginia, 

must  be  attested  by  witnesses,  in  Washington,    Wisconsin    and    Wy- 

addition    to    acknowledgment,  bo-  oming. 
fore  it  can  be  recorded :  New  Hamp- 


APPENDIX.  193 

In  the  following  states  and  territories,  North  Carolina,  Ala- 
bama, Arkansas,  Montana,  Rhode  Island,  Wyoming,  Michi- 
gan, Maryland,  JSTevv  Mexico  and  California,  this  clause  is  to 
be  added: 

It  is  farther  understood  and  agreed,  that  if   any  default,  as 

aforesaid,  shall  be  made  by  said or  his  grantee, 

then  it  shall  be  lawful  for  said  association  to  sell  said  real 
estate  at  public  (or  private)'  sale  in  said  county,  for  cash  or 
upon  such  other  terms  as  said  association  may  deem  best,  after 

notice,  by   publishing  in  a  proper   newspaper, 

published  in  said  county,  and  thereafter  said  association  may 
convey  in  fee  simple,  such  land  to  the  purchaser  or  purchasers 
thereof,  freed  from  any  claim,  title  or  right  of  redemption  of 
said  mortgagors,  or  either  of  them;  and  out  of  the  proceeds  of 
such  sale  to  retain  the  amount  due  said  association,  on  account 
of  said  loan,  together  with  all  costs  incident  to  such  sale  and 
conveyance,  and  the  balance,  if  any,  remaining,  shall  be  paid 
to  said 


The  association  may  loan  its  shareholders  on  their  stock  up 
to  its  surrender  value.  In  such  cases,  the  following  form  is 
used: 

Association. 

Collateral   Transfer  for  Loans. 

I,  the  undersigned,  shareholder  in  the  above  named  Asso- 
ciation, do  hereby  assign,  transfer,  and  set  over  to  the  said 
Association,  all  my  right,  title  and  interest  in  and  to  the  num- 
ber of  shares  (in  the  particular  series)  of  the  capital  stock  of 
said  association,  indicated  below,  said  shares  to  be  held  by 
said  association  as  collateral  security,  (in  addition  to  note 
given)  for  payment  of  loan  made  to  me  by  said  association. 
I  hereby  bind  myself  to  continue  to  pay  the  monthly  dues 
upon  each  of  the  several  shares,  and  all  lines,  if  any,  and  to  be 
governed  in  all  respects  by  the  by-laws  of  said  association. 
13  *Just  as  the  statute  may  provide. 


194  BUILDING   ASSOCIATIONS. 

Loan. 

Book  ITo Shares  of  Ser iea On  Shares  $ . . 

Shares  of  Series Monthly  Interest 

', Shares  of  Series Monthly  Premium 

Dated. 

Signature  of  Witness.  Signature  of  Shareholder. 


Note. 

$ 18... 

Having  this  day  pledged  and  transferred  to  the. . .  .a  corpo- 
ration duly  established  by  law shares  of  its  capital 

Btock,   said   shares   being.... in   the  ....series   as   collateral 
security,  for  the  payment  of  the  suras  herein  mentioned,  upon 

which  shares  the  sum  of dollars  ($ )  has  been 

advanced  to  me,  by  said  association,  for  value  received,  on 
demand   after   date,  I  promise  to  pay   to  said  association,  or 

order,  t)ie  sum  of dollars  (S )  and  until  the 

payment  of  said  sum  of dollars  ($ ),  to 

pay  to  said  association,  or  order,  the  sum  of 

dollars  ($ )  at  or    before    the  stated meetings 

of     the    board    of    directors    of     said     association    on    the 

second of  each  and  every hereafter,   being  the 

amount  of  the dues  on  said  shares  of  the 

interest  and  premium  upon  said  loan  or  advance  of 

dollars  ($ )  for  which  said  shares  are  pledged  and  this 

note  given,  together  with  all  fines  chargeable  by  the  by-laws 
of  said  association,  upon  arrears  of  such  (monthly)  payments. 
Signed  in  the  presence  of 


rorm  of  Trust  Deed. 

Trust  deeds  are  used  in  the  following  States  and  Territories: 
Missouri,    Mississippi,   Utah,   Tennessee,    Yirginia,   West 
Yirginia,  New  Mexico,  and  also  District  of  Columbia. 


APPENDIX.  195 

This  indenture  made  and  entered  into  this day  of 

,  A.  D.,  18 bv  and  between 

of  the  County  of State  of 

part of  the  first  part,  and County 

of ,  State  of.... part of  second  part, 

and  the Association,  a  corporation  4uly 

organized  under  the  lawB  of  the  State  of part 

of  the  third  part. 

"Witnesseth:    That  the  said  part of  first  part,  in  consid- 
eration of  the  debt   and   trust   hereinafter   mentioned    and 

created,  and  the  sum  of  One  Dollar  to paid  by  said  part 

of  the  second  part,  the  receipt  of  which  is  hereby  ac- 
knowledged, do  by  these  presents  grant,  bargain  and  sell, 
convey  and  confirm,  (or  convey  and  warrant),  unto  the  second 
party  of  second  part,  the  following  described  real  estate,  sit- 
uated in  the  County  of ,  State  of 

. , and  possession  of  said  premises,  now  de- 
liver unto  said  party  of  second  part. 

To  have  and  to  hold  the  same,  with  the  appurtenances  to 
said  party  of  the  second  part,  and  to  his  successors  hereinafter 
designated,  and  to  the  assigns  of  him  and  his  successors  for- 
ever;  in  trust,  however,  for  the  following  purposes: 

Whereas,  the  said part of  the  first 

part,  by certain  bond  (or  note)  duly  executed  and 

delivered,  bearing  even  date  herewith,  are  bound  unto  said 
association,  party  of  the  third  part,  in  the  sura  of dol- 
lars ($ )  lawful  money  of  the  United  States  of  America, 

loaned  by  said  association  to  said  part of  the   first  part, 

on shares  of  stock  owned   by (in 

series )  of  said  association,  being  at  the  rate  of 

dollars  on  each  share,  conditioned  that  said  part.  — 

of  the  first  part heirs,  executors  and  administrators, 

do.,  well  and  truly  payor  caused  to  be  paid,  unto  the  said 
association,  its  successors  or  assigns,  in  lawful    money,    the 

interest  to  accrue  on  said    sum  of dollars;  at  the  rate 

of ....  per  cent  per  annum,  payable on   the.... 


196  BUILDING   ASSOCIATIONS. 

of  each  and  every hereafter,  and  shall  also 

well  and  truly  pay,  or  cause  to  be  paid,  unto  said  association  or 

assigns,  the  sum  of dollars on   the 

day  of  each  and  every hereafter,  for  the 

contribution  or  dues  on shares  of  the  capital 

stock  of  said  association  now  owned  by  said 

until  the  value  of  said  stock  shall  be  suthcient  to  divide  to 
each  and  every  share  thereof,  the  sum  of  two  hundred  dollars, 
($200.00),  and  shall  also  well  and  truly  pay,  or  cause  to  be  paid, 
to  the  said  association,  its  successors  or  assigns,  the  sum    of. . 

. dollars  on  said of  each  and  every 

hereafter,  for  the  premium  upon  the  amount  of  said  loan,  and 
shall  fully  indemnify  and  save  said  association  from  all  losses 
by  reason  of  said  loan,  according  to  the  by-laws,  rules  and 
regulations  that  are  or  may  be  made  by  the  said  association, 

and  also  that will  promptly  pay  all  taxes  or  liens 

of  whatsoever  nature,  levied  or  assessed  upon  said  real  estate, 
described  in  this  deed  of  trust,  within  the  limited  time  by  law 

for  the  payment  thereof,  and  also  that will  keep 

the  buildings  upon  said  real  estate  as  herein  described,  con- 
stantly insured  in  some  responsible  insurance  company  or 
companies,  to  be  approved  by  the  directors  of  said  association, 

in  a  sum  not  less   than dollars,  and  the 

policy  or  policies  of  such  insurance  duly  assigned  and  de- 
livered to  said  association;  and  also  pay  all  lines  and  assess- 
ments asainst  said  shares.     Said  bond  further  contains  an 

express  covenant  and  agreement  on  the  part  of  said  part 

of  the  first  part  to  and  with  said  association,  that  if,  at  any 
time,  default  shall  be  made  in  the  payment  of  said  interest  on 

said  sum  of dollars,  or  in  the  payment  of 

the  monthly  contributions  or  dues  on  said  stock,  or  in  any 
monthly  payment  of  the  sum  provided  in  said  bond,  and  herein 
to  be  paid  as  premium  on  said  loan,  or  tines  or  assessments, 
the  same  or  either  of  said  sums  shall  remain  unpaid  for  the 
space  of  six  months  after  any  payment  thereof  shall  fall  due, 
then,  and  in  such  case,  the  whole  principal  debt  aforesaid  shall, 
at  the  option  of  said  association,  their  successors  and  assigns, 
immediately  thereupon  become  due  and  payable  and  recover- 


I 


i 


APPENDIX.  197 

able;  and  the  payment  of  said  principal  sum  and  all  interest 

thereon,  as  well  as  contributions  on  said shares 

of  stock,  whatsoever  due,  may  be  recovered  by  sale,  under  said 
deed  of  trust,  or  other  legal  proceedings,  as  provided  by  law, 
and  also  if  any  taxes  or  liens  whatsoever  lawfully  levied  or 
assessed  on  said  real  estate  remain  due  and  unpaid,  or  if  said 
real  estate  shall  be  advertised  for  sale  for  the  payment  of  taxes, 

or  if  the  said shall  fail  or   neglect  to  keep 

said  buildings  constantly  insured,  and  the  policy  or  policies 
of  insurance  duly  assigned  to  the  said  association,  then  the 
said  association,  may  at  its  option,  proceed  to  recover  the 
whole  amount  due  by  the  provisions  of  said  bond;  or  the  said 
association  may  pay  said  taxes  or  liens,  or  redeem  said  real 
estate  from  sale  for  taxes  or  liens,  and  cause  said  buildings  to 
be  insured  for  the  amount  above  specified,  and  the  amount  of 
taxes  or  liens  paid  and  amount  of  premiums  paid  for  said 
insurance,  by  said  association,  shall  be  added  to  the  record 
as  a  part  of  the  amount  secured  by   said  bond  in  this   deed 

of  trust;  and  the  same  shall  bear  interest  at  the  rate  of 

per  cent  per  annum,  until  repayment  shall  be  made  to  said 

association,   and    also  that    the  part of  the   first  part, 

shall  pay  all  necessary  and  proper  costs  and  expenses  of 
whatsoever  nature,  incurred  about  the  collection  of  this  trust, 
including  a  reasonable  attorney's  fee,  costs  of  sale,  or  other 
legal  proceedings  thereunder. 

Now,  therefore,  if  the  said  part....  of  the  first  part  shall 
fully  and  faithfully  comply  with  the  conditions,  provi- 
sions and  agreements  contained  in  said  bond,  and,  in  this  deed 
of  trust,  according  to  the  true  tenor  and  effect  thereof,  then 
this  deed  shall  be  void,  and  the  property  hereinbefore  conveyed 
shall  be  released  at  the  cost  of  said  part ....  of  the  first  part. 

But  should  the  said  part. . .  .of  the  first  part,  fail  or  refuse 
to  comply  with  such  conditions,  provisions  and  agreements 
contained  in  said  bond,  and  in  this  deed  of  trust,  then  this  deed 
shall  be  and  remain  in  full  force  and  effect,  and  the  said 
party  of  the  second  part,  or  is  case  of  his  absence  or  death,  or 
refusal  or  disability  to  act  in  anywise,  the  then  acting  sheriff 


lyb 


BUILDING   ASSOCIATIONS. 


of County at  the  request  of  said  association, 

its  successors  and  assigns,  may  proceed  to  sell  the  property 
hereinbefore  described,  or  any  part  thereof,  at  public  vendue, 
to  the  highest  bidder,  at in 

County for  cash,  first  giving day's  notice 

of  the  time,  place  and  terms  of  sale,  and  all  the  property  to 
be  sold,  by  advertisement  in  some  newspaper,  printed  and 

published  in County and  upon    such  sale 

shall  execute  and  deliver  a  deed  of  conveyance  of  the  property 
sold  to  the  purchaser  or  purchasers  thereof,  and  any  statement 
or  recital  of  fact  in  such  deed,  in  relation  to  the  nonpayment 
of  money  hereby  secured  to  be  paid,  existence  of  the  indebted- 
ness so  secured,  notice  of  sale  by  advertisement,  sale,  receipt 
of  money,  and  the  happening  of  any  of  the  aforesaid  events, 
whereby  the  sheriff  may  become  successor  as  herein  provided, 
shall  be  'prima  facie  evidence  of  the  truth  of  such  statement 
or  recital;  and  the  said  trustee  shall  receive  the  proceeds  of 
said  sale,  out  of  which  he  shall  pay,  first,  the  cost  and  expen- 
ses of  executing  this  trust,  including  compensation  to  the 
trustee  for  his  services,  and  legal  expenses  to  the  attorney  for 
his  services;  and  next  he  shall  apply  the  proceeds  thereof, 
remaining  over,  to  the  payment  of  said  debt  and  interest,  and 
the  premium  and  so  much  thereof  as  remains  unpaid,  and  the 
remainder,  if  any,  shall  be  paid  to  the  said  part. . .  .of  the  first 
part  or. . .  .legal  representatives. 

The  said  party  of  the  third  part  may  become  the  purchaser 

at  the  sale  of  said  land,  made   by  said as  trustee,  or 

any  person  acting  in  his  stead  as  trustee,  as  aforesaid,  just  as 
if  such  sale  were  made  by  a  trustee  in  whose  trust  said  asso- 
ciation had  no  interest. 

In   witness   whereof,    the   said   part,... of   the  first  part, 

ha .  hereunto  set ... .  hand ....  and  seal . . . . ,  this   day  and 

year  first  above  written. 

Executed  in  the  presence  of [seal] 

[seal] 

[seal] 

« [seal] 


APPENDIX.  199 

Form  of  Insurance  Clause. 

The  following  insurance  clause  should  be  used.  Under  the 
ordinary  "loss  if  any  payable"  clause,  the  rights  of  the  asso- 
ciation may  be  jeopardized  by  some  act  of  the  mortgagor. 

Union  Mortgage  Clause. 

Loss,  if  any,  payable  to mortgagee  or  trustee,  as 

hereinafter  provided. 

It  being  hereby  understood  and  agreed,  that  this  insurance, 
as  to  the  interest  of  the  mortgagee  or  trustee,  only  herein, 
shall  not  be  invalidated  by  any  act  or  neglect  of  the  mortgagor 
or  owner  of  the  property  insured,  nor  by  the  occupation  of 
the  premises  for  purposes  more  hazardous  than  are  permitted 
by  the  terms  of  this  policy.  Provided,  that  in  case  the  mort- 
gagor or  owner  neglects  or  refuses  to  pay  any  premium  due 
under  this  policy,  then,  on  demand,  the  mortgagee  or  trustee 
shall  pay  the  same.  Provided,  also,  that  the  mortgagee  or 
trustee  shall  notify  this  company  of  any  change  of  ownership, 
or  increase  of  hazard,  which  shall  come  to  his,  or  their  know- 
ledge, and  shall  have  permission  for  such  change  of  owner- 
ship or  increase  of  hazard,  duly  endorsed  on  this  Policy.  And, 
provided,  further,  that  every  increase  of  hazard  not  permitted 
by  the  policy  to  the  mortgagor  or  owner,  shall  be  paid  for  by 
the  mortgagee  or  trustee,  on  reasonable  demand,  and  after 
demand  made  by  this  company  upon,  and  refusal  by  the  mort- 
gagor or  owner  to  pay,  according  to  the  established  schedule 
of  rates.  It  is,  however,  understood  that  this  company 
reserves  the  right  to  cancel  this  policy,  as  stipulated  in  the 
printed  conditions  in  said  policy;  and  also,  to  cancpl  this 
agreement  on  giving  ten  days'  notice  of  their  intention  to  the 
trustee  or  mortgaiice  named  therein,  and  from  and  after  the 
expiration  of  the  said  ten  days,  this  agreement  shall  be  null 
and  void.  It  is  further  agreed,  that  in  case  of  any  other 
insurance  upon  the  property  hereby  insured,  then  this  com- 
pany shall  not  be  liable  under  this  policy  for  a  greater  pro]-»or- 
tion  of  any  loss  sustained  than  the  sum  hereby  insured  bears 
to  the  whole  amount  of  insurance  on  said  property,  issued  to 


200 


BUIl^DIiNG    ASSOCIATIONS. 


or  held  by  any  party  or  parties  having  an  insurable  interest 
therein.  It  is  also  agreed,  that  whenever  this  company  shall 
pay  the  mortgagee  or  trustee  any  sum  for  loss  under  this 
policy,  and  shall  claim  that  as  to  the  mortgagor  or  owner,  no 
liability  therefore  existed,  it  shall  at  once,  and  to  the  extent  of 
such  payment,  be  legally  subrogated  to  all  the  rights  of  the 
party  to  whom  such  payments  shall  be  made,  under  any  and 
all  securities  held  by  such  party,  for  the  payment  of  said  debt. 
But  such  subrogation  shall  be  in  subordination  to  the  claim 
of  said  party,  for  the  balance  of  the  debt  so  secured.  Or  said 
company  may,  as  its  option,  pay  the  said  mortgagee  or  trustee 
the  whole  debt  so  secured,  with  all  the  interest  which  may 
have  accrued  thereon,  to  the  date  of  such  payment,  and  shall 
thereupon  receive  from  the  party  to  whom  such  payment 
shall  be  made,  an  assignment  and  transfer  of  said  debts,  with 
all  securities  held  by  said  parties  for  the  payment  thereof. 

To  attach  to  Policy  No of  the 

Dated  at this day  of 189 ... , 

Agent. 

Form  of  Bond. 

Where  the  whole  premium  is  deducted  from  the  loan  at  the 
time  of  making  it,  this  form  may  be  used  with  the  general 
form  of  mortgage  hereinbefore  given,  identifying  it  in  the 
body  of  such  mortgage. 

Know  all  men  by  these  presents,  that of.... County 

State  of held  and  firmly   bound  unto  the 

Building  and  Loan  Association,  of a  corporation 

duly  organized  and  doing  business  under  the  laws  of  the  State 

of in  the  sum  of dollars, 

for  the  payment  whereof,  well  and  truly  to  be  made, 

bind sel heirs,  executors,   adrainistrators 

and  assigns,  jointly  and  severally,  hrmly  by  these  presents. 


Witness hand  and    seal,  this day  of, 

A.  D.  18.... 


APPENDIX.  201 

The  condition  of  the  above  obligation  is  sach,  that  whereas, 

on  the day  of A.  D.  18 ,  the  said 

being  a  member  of  said  association,  by  bidding. . .  .per  cent 

premium  on^  the  par  value  of shares  of  the series 

of  the  capital  stock  of  the  said  association,  obtained  jirecedence 

of  an  advanced  loan,  to  the   amount   of dollars,    and 

has,  after  deducting  the  premium  bid  as  aforesaid,  received 

dollars,  it  being  the  full  value  and  in  full  payment  of 

said shares  of  stock. 

Now,  if  the  above  obligor, heirs,  executors,  admin- 
istrators and  assigns,  or  any  of  them,  shall  well  and  truly  pay, 
or  cause  to  be  paid,  unto  the  above   obligee,  its  successor  or 

assigns,  the  sum  of dollars,  said  sum  to  be  paid   in 

monthly  installments  of dollars  each,  the  first  pay- 
ment or  installment  due  and  payable A.  D,   18    . . . , 

and dollars  monthly  thereafter,  being  the    monthly 

dues  on  said shares  of  stock,  together  with  interest  at 

the  rate  of per  cent  per  annum,  on  said dollars, 

said  interest  due  and  payable  in  monthly  installments  of 

dollars  and cents,  the  first  of  said  interest  installment, 

due  and  payable A.  D.  18 said  dues  and  interest 

payable  on  the  first  day  of  each  month  thereafter;  said  install- 
ments of  principal  and  interest  to  be  paid  promptly,  as  they 
become  due,  during  the  existence  of  said  association,  or  until 

€ach  shareholder  in  the series  thereof,  has  received  on 

each  of  his  shares  one  hundred  dollars,  including  any  pre- 
mium which  he  may  have  bid  on  his  share  or  shares,  and  shall 
also  pay  all  fines  assessed  on  said  stock,  and  all  taxes,  insur- 
ance or  incumbrances  of  any  kind,  which  may  be  imposed  upon 
the  property  conveyed  by  mortgage  deed  to  secure  the  above 
indebtedness,  without  delay,  then  the  above  obligation  to  be 
void,  otherwise  to  remain  in  full  force  and  virtue. 

Provided,  however,  and  it  is  expressly  agreed,  if  at  any  time 
default  shall  be  made  in  the  payment  of  said  installments  of 
principal  money,  when  due,  or  of  said  interest,  or  of  fines  due 
imder  the  by-laws  of  said  association,  for  the  space  of   six 


202  BUILDING   ASSOCIATIONS. 

months  after  any  payment  thereof  shall  fall  due,   the   said 

shares  of  stock  of series,  on  which  the  said 

loan  is  obtained  and  herewitli  transferred,  may  at  any  time 
thereafter  be  declared  forfeited,  as  for  non-payment  of  dues, 
and  therefrom  revert  to  said  obligee,  its  successors  or  assigns, 
as  forfeited  stock,  and  the  withdrawal  value  thereof,  less  one- 
eighth  of  said  premium  bid  for  said  loan  for  each  year,   said 

series  of  stock  shall  have  run,  at  the  option  of  the 

obligee,  its  successors  or  assigns,  be  applied  to  the  satisfaction 
of  the  above  indebtedness,  and  in  such  case  or  cases,  the  whole 
principal  debt  aforesaid,  and  interest  shall,  at  the  option  of  the 
obligee,  its  successors  or  assigns,  immediately  become  due  and 
recoverable,  and  payment  of  said  principal  sura  and  all  the 

interest  thereon,  as  well  as  any  contribution  on    said 

shares  of  stock,  and  all  lines  and  taxes  as  aforesaid  then  due, 
may  be  enforced  and  recovered  at  once,  anything  herein  con- 
tained to  the  contrary  notwithstanding;  and  it  is  further 
understood  and  agreed,  that  all  lines  and  penalties  for  non- 
payment of  dues  are  agreed,  assessed  and  liquidated  damages 
for  such  non-payment  of  installments  due  on  said  stock. 


[seal.] 

,  [SEAIi.] 


The  following  is  the  form  of  bond  in  use  by  associations  in 
Pennsylvania : 

Know  all  men  by  these  presents,  that (hereinafter 

called  the  obligor),  is  held  and  firmly  bound  unto (herein- 
after called  the  obligees),  in  the  sum  of dollars,  law- 

ful  money  of  the  United  States  of  America,  to  be  paid  to  the 
said  obligees,  their  certain  Attorney,   successors   or  assigns. 

To  which  payment  well  and  truly  to  be  made, do  bind 

heirs,  executors  and  administrators,  and  every  one  of 

them,  firmly  by  these  presents.     Sealed  with seal 

dated  the day  of in  the  year  of  our  Lord  one 

thousand  eight  hundred  and 


APPENDIX.  203 

The  condition  of  this  oblii^^ation  is  such,  that  if  the  above 

bounded  obligor heirs,  executors  and  administrators, 

or  any  of  thera,  shall  and  do  well  and  truly  pay,  or  cause  to 
be  paid,  unto  the  above-named  obligees,  their  certain  attorney, 

successors  or  assigns,  the  just  sura  of dollars,  such  as 

above  said,  at  any  time  within  one  year  from  the  date  hereof, 

together  with  interest, for  the  same,  and  together  with 

all  fines  imposed  by  the  constitution  and  by-laws  of  the  afore- 
said   association,  in   like  money,  payable    monthly,    on   the 

of  each   and  every  month  hereafter,  and  shall  also 

well  and  truly  pay,  or  cause  to  be  paid,  unto  the  said  obligees, 
their  successors  or  assigns,  the  sum  of .  . .  .dollars,  on  the  said 
....  of  each  and  every  month  hereafter,  as  and  for  the  monthly 

contribution  on share  of  the  capital  stock  of  the  said 

obligees,  now  owned  by  the  said  obligor,  without  any  fraud 
or  further  delay;  and  shall  also  deliver  to  the  said  obligees, 

their  successors  or  assigns,  on  or  before  the day  of 

of  each  and  every  year,   receipts  for  all  taxes  of  the 

current  year,  assessed  upon  the  premises  described  in  the 
accompanying  indenture  of  mortgage.  Provided,  however, 
and  it  is  hereby  expressly  agreed,  that  if  at  any  time  default 
shall  be  made  in  the  payment  of  the  said  principal  money 
when  due,  or  of  the  said  interest,  or  of  the  said  fines, 
or  the  monthly  contribution,  on  said  stock,  for  the  space 
of  six  months  after  any  payment  thereof  shall  fall  due,  or 
in    such   delivery   to  the   said   obligees,   their  successors   or 

assigns,  on  or  before  the day  of of  each  and 

every  year,  of  such  receipts  for  such  taxes  of  the  current  year, 
upon  the  premises  mortgaged,  or  if  the  said  obligor   shall  not 

well  and  truly  pay,  or  cause  to  be  paid,  the and  taxes, 

on  the  premises  particularly  described  in  the  mortgage  accom- 
panying this  obligation,  when  the  same  shall  become  due  and 
payable,  and  also  shall  not  well  and  truly  pay,  or  cause  to  be 
paid,  all  and  every  sucli  sum  or  sums  as  shall  liereafter  be 
assessed  by  any  public  authority  upon  the  said  principal  debt 
or  sum,  or  upon  the  interest  thereof,  then,  and  in  such  case, 
the  whole  principal  debt  aforesaid  shall,  at  the  option  of  the 
eaid  obligees,  their  successors  and  assigns,  immediately  there- 


204  BUILDING   ASSOCIATIONS. 

upon  become  due,  payable  and  recoverable,  and  payment  to 
said  principal  sum,  and  all  interest,  and  all  fines,  thereon,  as 

well  as  any  contribution  on  said share  of   stock  then 

due,  may  be  enforced  and  recovered  at  once,  any  thing  here- 
in before  contained  to  the  contrary  thereof  notwithstanding. 
And  it  is  hereby  further  agreed,  that  if  the  same,  or  any  part 
thereof,  has  to  be  collected  by  process  of  law,  that  an  attor- 
ney's fee  of  .... per  cent  shall  be  added  to  and  collected 

as  a  part  of  the  costs  of  such  proceedings.  And  the  said  obli- 
gor, for heirs,  executors,  administrators  and  assigns,  hereby 

expressly  waive  and  relinquish  unto   the  said   obligees,  their 

successors  and  assigns,  all  benefit  that  may  accrue  to 

by  virtue  of  any  and  every  law,  made  or  to  be  made,  to  exempt 
the  premises  described  in  the  indenture  of  the  mortgage  here- 
with given,  or  of  any  other  premises  or  property  whatever, 
from  levy  and  sale  under  execution,  or  any  part  of  the  proceeds 
arising  from  the  sale  thereof,  from  the  payment  of  the  moneys 
hereby  secured,  or  any  part  thereof,  and  the  cost  of  such  action 
and  execution,  then  the  above  obligation  to  be  void,  or  else  to 
be  and  remain  in  full  force  and  virtue. 


Sealed  and  delivered,      ) 
in  the  presence  of  us,  ) 


To Esquire,  Attorney  of   the   Court  of   Common 

Pleas,  at in  the  County  of in  the  State  of .  ■ 

or  to  any  other  Attorney,  or  to  the  Prothonotary  of  the  said 
Court,  or  of  any  other  Court,  there  or  elsewhere. 

Whereas, in  and  by  a  certain  obligation,  bearing  even 

date  herewith,  do ... .  stand  bound  unto in  the  sum  of 

lawful  money  of  the  United  States  of  America,  conditioned  for 
the  payment  of  the  just  sum  of dollars,  such  as  above- 
said,  at  any  time  within  one  year  from  the  date  thereof,  to- 
gether with  interest, for  the  same,  and  together  with 

all  fines  imposed  by  the  constitution  and  by-laws  of  the  afore- 
said association,  in  like  money,  payable  monthly,<on  the.... 
of  each  and  every  month  thereafter,  and  should  also  well  and 
truly  pay,  or  cause  to  be  paid  unto  the  said  obligees,  their 
successors  or  assigns,  the  sum  of dollars,  on  the 


APPENDIX.  205 

of  each  and  every  month  thereafter,  as  and  for  the  monthly 

contribution  on share  of  the  capital  stock  of  the  said 

obligees,  now  owned  by  the  said  obligor,  without  any  fraud 
or  further  delay;  and  should  also  deliver  to  the  said  obligees, 

their  successors  or  assigns,  on  or   before  the day  of 

of  each  and  every  year,  of  receipts  for  all  taxes  of 

the  current  year  assessed  upon  the  premises  described  in  the 
mortgage  accompanying  said  obligation.  Provided,  however, 
and  it  is  thereby  expressly  agreed,  that  if  at  any  time  default 
should  be  made  in  the  payment  of  the  said  principal  money 
when  due,  or  of  the  said  interest,  or  of  the  said  fines,  or  the 
monthly  contribution  on  said  stock,  for  the  space  of  six  months 
after  any  payment  thereof  should  fall  due,  or  in  the  delivery 
to  the  said  obligees,  their  successors  or  assigns,  on  or  before 

the day  of of  each  and  every  year,  of  such 

receipts  for  such  taxes  of  the  current  year,  assessed  upon  the 
mortgaged  premises,  or  if  the  said  obligor  shall  not  well  and 

truly  pay,  or  cause  to  be  paid,  the and  taxes,  on  the 

premises  particularly  described  in  the  mortgage  accompanying 
this  obligation,  when  the  same  shall  become  due  and  payable, 
and  also  shall  not  well  and  truly  pay,  or  cause  to  be  paid,  all 
and  every  such  sum  or  sums  as  should  thereafter  be  assessed 
by  any  public  authority  upon  the  said  principal  debt  or  sum, 
or  upon  the  interest  thereof,  then  and  in  such  case  the  whole 
principal  debt  aforesaid  should,  at  the  option  of  the  said  obli- 
gees, their  successors  and  assigns,  immediately  thereupon  be- 
come due,  payable  and  recoverable,  and  payment  of  said  prin- 
cipal sum,  and  all  interest,   and  all  tines  thereon,  as  vi-ell  as 

any  contribution  on  said share   of  stock,  then   due, 

might  be  enforced  and  recovered  at  once,  any  thing  therein- 
before contained  to  the  contrary  thereof  notwithstanding. 
And  it  is  thereby  further  agreed,  that  if  the  same,  or  any  part 
thereof,  has  to  be  collected  by  process  of  law,  then  an  attor- 
ney's fee  of per  cent  should   be  added  to  the  amount 

so  collected,  as  a  part  of  the  costs  of  such  proceedings.     And 

the  said  obligor   for heirs,  executors,  administrators 

and  assigns,  thereby  expressly  waived  and  relinquished  unto 
the  said  obligees,  their  successors  and  assigns,  all  beuelit  that 


206  BUILDING    ASSOCIATIONS. 

might  accrue  to bj  virtue  of  any  and  every  law,  made 

or  to  be  made,  to  exempt  tiie  premises  descriLei  in  the 
indenture  of  mortgage  therewith  given,  or  of  any  other  pre- 
mises or  property  wliatever,  from  levy  and  sale  under  execu- 
tion, or  any  part  of  the  proceeds  arising  from  the  sale  thereof, 
from  the  payment  of  the  moneys  thereby  secured,  or  any  part 
thereof.     These  are  to  desire  and  authorize  you,  or  any  of  you, 

to  appear  for heirs,  executors,  or  administrators,  in 

the  said  Court  or  elsewhere,  in  an  action  of   debt,  there   or 

elsewhere  brought,  or  to  be  brought,   against heirs, 

executors,  or  administrators,  at  the  suit  of  the  said  obligees, 
their  successors  or  assigns,  on  the  said  obligation,  as  of  any 
term  or  time  past,  present,  or  any  other  subsequent  term  or 
time,  there  or  elsewhere  to  be  held,  and  confess  or  enter  judg- 
ment thereupon,  against heirs,  executors,  or  admini- 
strators, for  the  sum  of dollars,  lawful  money  of  the 

United  States  of  America,  debt,  besides  costs  of  suit,  by  non 
sum  iiiforrnatus,  nihil  dioit^  or  otherwise,  as  to  you  shall  seem 
meet;  and  for  your,  or  any  of  your  so  doing,  this  shall  be  your 
sufficient  warrant.  And ....  do  hereby  for heirs,  exe- 
cutors and  administrators,  remise,  release,  and  forever  quit 
claim  unto  the  said  obligees,  their  certain  attorney,  successors 
and  assigns,  all  and  all  mannerof  error  and  errors,  misprisions, 
misentries,  defects  and  imperfections  whatever,  in  the  entering 
of  the  said  judgment,  or  any  process  or  proceedings  thereon 
or  thereto,  or  anywise  touching  or  concerning  the  same. 

In  witness  whereof, ....  have  hereunto  set . . .  .hand  and  seal, 

the day  of in  the  year  of  our  Lord  one  thousand 

eight  hundred  and 

Sealed  and  delivered,  )         

in  the  presence  of  us,      f        

The  following  is  the  form  of  mortgage  used  by  associations 
in  Pennsylvania: 

This  indenture.  Made  the day  of in  the 

year  of  our  Lord  one  thousand   eight  hundred  and 

between of  the  one  part  (mortgagor), of  the 

other  part  mortgagees). 


APPENDIX.  .  207 

Whereas,  the  said  mortgagor,  in  and  by obligation, 

or  writing  obligatory,  under. band  and  seal,  duly  executed, 

bearing  even  date  herewith,  stand  bound  unto  the  said  mort- 
gagees, in  the  sum  of dollars,  lawful  money  of  the 

United  States  of  America,  conditioned  for  the  payment  of  the 

just  sum  of dollars,  at  any  time  within  one  year  from 

the  date  thereof,  together  with  interest, for  the  same, 

in  like  money,  payable  monthly,  and  together  with  all  fines 
imposed  by  the  constitution  and  by-laws  of  the  aforesaid  asso- 
ciation, on  the of  each  and  every  month  thereafter,  and 

should  also  well  and  truly  pay,  or  cause  to  be  paid,  unto  the 

said  mortgagees,  their  successors  or  assigns,  the  sum  of 

dollars,  on  the  said  ....   of  eadi  and  every  month  thereafter, 

as  and  for  the  monthly  contribution  on share  of  the 

capital  stock  of  the  said  mortgagees,  now  owned  by  the  said 
mortgagor,  without  any  fraud  or  further  delay;  and  should  also 
deliver  to  the  said  mortgagees,  their  successors  or  assigns,  on  or 
before  the  ....  day  of  ....  of  each  and  every  year,  receipts 
for  all  taxes  of  the  current  year  assessed  upon  the  hereinafter, 
described  premises.  Provided,  however,  and  it  is  hereby 
expressly  agreed,  that  if  at  any  time  default  should  be  made 
in  the  payment  of  the  said  principal  money  when  due,  or  of 
the  said  interest,  or  of  the  said  fines,  or  the  monthly  contribu- 
tion on  said  stock,  for  the  space  of  six  months  after  any  pay- 
ment thereof  should  fall  due,  or  in  such  delivery  to  the  said 
mortgagees,  their  successors  or  assigns,  on  or  before  the  .... 
day  of ....  of  each  and  every  year,  of  such  receipts  for  such  taxes 
of  the  current  year,  upon  the  premises  mortgaged,  or  if  the 
said  mortgagor  should  not  well  and  truly  pay,  or  cause  to  be 

paid,  the and  taxes,  on  the  hereinafter   described 

premises,  when  the  same  should  become  due  and  payable,  and 
also  should  not  well  and  truly  pay,  or  cause  to  be  paid,  all  and 
every  such  sum  or  suras  as  should  thereafter  be  assessed  by  any 
public  authority  upon  the  said  principal  debt  or  sum,  or  upon 
the  interest  thereof,  then,  and  in  such  case  the  whole  principal 
debt  aforesaid  should,  at  the  option  of  the  said  mortgagees, 
their  successors  and  assigns,  immediately  thereupon  become 
due,  payable  and  recoverable,  and  payment  of  said  principal 


208  BUILDING  ASSOCIATIONS. 

sum,  and  all  interest,  and  all  fines  thereon,  as  well  as  any  con- 
tribution on  said share  of  stock  then  due,  maj  be 

enforced  and  recovered  at  once,  anything  therein  before  con- 
tained to  the  contrary  thereof  notwithstanding.  And  it  was 
therein  further  agreed,  that  if  the  same  or  any  part  thereof 
has  to  be  collected  by  proceedings  at  law,  then  an  attorney's 
collection  fee  of  ....  per  cent  should  be  added  to  the  amount 
so  collected  as  a  part  of  the  costs  of  such  proceedings.     And 

the  said  mortgaofor  for heirs,  executors,  administra- 

tors  and  assigns,  thereby  expressly  waived  and  relinquished 
unto  the  said  mortgagees,  their  successors  and  assigns,  all  bene- 
fit that  might  accrue  to    by  virtue  of  any  and  every 

law  made  or  to  be  made,  exempting  the  premises  hereinafter 
described,  or  of  any  other  premises  or  property  whatever,  from 
levy  and  sale  under  execution,  or  any  part  of  the  proceeds  aris- 
ing from  the  sale  thereof,  from  the  payment  of  the  moneys 
thereby  secured,  or  any  part  thereof,  and  the  cost  of  such 
action  and  execution,  as  in  and  by  the  said  above  recited  obli- 
gation and  the  condition  thereof,  relation  being  thereunto  had 
may  more  fully  and  at  large  appear. 

Now  this  indenture  witnesseth,  that  the  said  mortgagor,  as 
well  for  and  in  consideration  of  the  premises,  as  of  the  afore- 
said debt  or  principal  sum  of    dollars,  and  for  the 

better  securing  the  payment  of  the  same,  with  interest, 
too-ether  with  all  fines,  and  together  with  the  monthly  contri- 
bution of   dollars,   on   the  said    share  of 

stock  owned  by  the  said  mortgagor,  unto  the  said  mortgagees, 
their  successors  and  assigns,  in  discharge  of  the  said  above 
recited  obligation,  as  of  the  further  sum  of  one  dollar,  lawful 

money,  unto in  hand  well  and  truly  paid,  by  the  said 

morto-ai-ees,  at  the  time  of  the  execution  hereof,  the  receipt 

whereof  is  hereby  acknowledged,    granted,  bargained, 

sold,  aliened,  enfeoffed,  released  and  confirmed,  and  by  these 

presents grant,  bargain,  sell,  alien,  enfeoff,  release  and 

confirm  unto  the  said  mortgagees,  their  successors  and  assigns. 

Together  with  all  and  singular  the  buildings,  streets,  alleys, 
passages,  ways,  waters,  water-courses,  rights,  liberties,  privi- 


APPENDIX.  20y 

leges,  improvements,  hereditaments  and  appurtenances,  what- 
soever, thereunto  belonging,  or  in  any  wise  appertaining,  and 
the  reversions  and  remainders,  rents,  issues  and  profits  thereof. 

To  have  and  to  hold  the  said hereditaments  and 

premises  hereby  granted,  or  mentioned  and  intended  so  to  be 

with  the  appurtenances, unto  the  said  mortgagees,  their 

successors  and  assigns,  to  and  for  the  only  proper  use  and  behoof 
of  the  said  mortgagees,  their  successors  and  assigns  forever. 

Provided,  always,  nevertheless,  that  if  the  said  mortgagor . .  . 
heirs,  executors,  administrators  or  assigns,  do  and  shall  well 
and  truly  i)ay,  or  cause  to  be  paid,  unto  the  said  mortgagees, 
their  successors  or  assigns,  the  aforesaid  debt  or  principal  sum 

of ,  dollars,  together  with  interest, and  together 

with  the  fines  aforesaid,  on  the  days  and  times  hereinbefore 
mentioned  and  appointed  for  the  payment  of  the  same;  and 
shall  also  well  and  truly  pay,  or  cause  to  be  paid,  to  the  said 
morto-atJ-ees,  their  successors  or  assigns,  the  above  mentioned 

sum  of dollars,  on  the of  every  month,  as 

and  for  the  contribution  on  the  said   share  of  stock  as  ' 

above  mentioned;  and  shall  on  or  before  the day  of 

of  each  and  every  year,  deliver  to  the  said  mortgagees, 

their  successors  or  assigns,  receipts  for  all  taxes  of  the  current 
year,  assessed  upon  the  mortgaged  premises,  according  to  the 
condition  of  the  said  above  recited  obligation,  without  any 
fraud  or  further  delay,  and  without  any  deduction,  defalcation 
or  abatement,  to  be  made  of  anything,  for,  or  in  respect  of  any 
taxes,  charges  or  assessments  whatsoever,  that  then,  and  from 
thenceforth,  as  well  this  present  indenture,  and  the  estate 
hereby  granted,  as  the  said  above  recited  obligation,  shall 
cease,  determine,  and  become  void,  anything  hereinbefore  con- 
tained to  the  contrary  thereof,  in  anywise  notwithstanding. 
Provided  further,  in  case  of  default  in  the  payment  of  the 
principal,  interest  or  fines  as  aforesaid,  or  any  part  thereof,  or 
in  default  of  the  payment  of  the  monthly  contribution  on  the 

siiid share  of  stock,  as  above  particularly  recited  and 

mentioned,  or  any  part  thereof,  for  the  space  of  six  months 
14 


210  BUILDING  ASSOCIATIONS. 

after  any  payment  thereof  shall  fall  due,  or  in  such  delivery  to 
the  said  mortgagees,  their  successors  or  assigns,  on  or  before 

the  ....  day  of of  each  and  every  year,  of  such  receipts 

for  such  taxes  of  the  current  year,  assessed  upon  the  mortgaged 
premises,  or  if  the  said  mortagor  shall  not  well  and  truly  pay, 

or  cause  to  be  paid,  the    and  taxes,  on  the  above 

described  premises,  when  the  same  shall  become  due  and  pay- 
able, and  also  shall  not  well  and  truly  pay,  or  cause  to  be  paid, 
all  and  every  such  sum  or  sums  as  shall  hereafter  be  assessed 
by  any  public  authority,  upon  the  said  principal  debt  or  sum, 
or  upon  the  interest  thereof,  then,  and  in  such  case,  the  whole 
principal  debt  aforesaid  shall  immediately  thereupon  become 
due,  payable  and  recoverable;  and  it  shall  and  may  be  lawful 
for  the  said  mortgagees,  their  successors  or  assigns,  to  sue  out 
forthwith  a  writ  of  scire  facias^  upon  this  present  indenture  of 
mortgage,  and  to  proceed  at  once  thereon  to  recover  the  princi- 
pal money   hereby   secured,    and   all   interest,    and   all   fines 

thereon,  as  well  as  any  contribution  on  said share  of 

stock  then  due,  according  to  law,  without  further  stay,  any  law 
or  usao-e  to  the  contrary  notwithstanding.  And  it  is  hereby 
agreed,  that  in  case  the  same  or  any  part  thereof  has  to  be  col- 
lected by  process  of  law,  that  an  attorney's  fee  of  ....  per 
cent,  shall  be  added  to  and  collected  as  a  part  of  the  costs  of 

such  proceedings.     And  the  said  mortgagor  for    heirs, 

executors,  administrators  and  assigns,  hereby  waive  and  relin- 
quish unto  the  said  mortgagees,  their  successors  and  assigns, 

all  benefit  that  may  accrue  to by  virtue  of  any  and  every 

law  made,  or  to  be  made,  to  exempt  the  said  above  described, 
premises,  or  any  other  property  whatever,  from  levy  and  sale 
under  execution,  or  any  part  of  the  proceeds  arising  from  the 
sale  thereof,  from  the  payment  of  the  moneys  hereby  secured, 
or  any  part  thereof. 

In  witness  whereof,  the  said  parties  to  these  presents  have 
hereunto  interchangeably  set  their  hands  and  seals.  Dated  the 
day  and  year  first  above  written. 

Sealed  and  delivered 
in  the  presence  of  us, 


APPENDIX.  211 

On  the day  of  A.  D.,  18 . .   before  me 

personally  appeared  the  above  named   and  in  due 

form  of  law  acknowledged  the  above  or  aforegoinci;  indenture 

of  mortgage  to  be act  and  deed,  and  desired  the  same 

might  be  recorded  as  such 

Witness  my  hand  and seal  the  day  and  year  afore- 
said. 

Recorded  in  the  office  for  recording  of  deeds,  in  and  for. . . . 
....  in  mortgage  book No page  ....  &c. 


Witness  my  hand  and  seal  of  office,  this day  of 

Anno  Domini  18 . . 

Form  of  Bond  used  by  New  Jersey  Associations. 

Know  all  men  by  these  presents : 

That .  . .  .held  and  firmly  bound  unto  a  . . .  .body  corporate, 

of  the  State  of  New  Jersey,  in  the    sum     of dollars, 

lawful  money  of  the  United  States  of  America,  to  be  paid  to 
the  said  Association,  its  successors  or  assigns,  for  which  pay- 
ment well  and   truly   to  be  made bind heirs, 

executors  and  administrators, firmly  by  these  pres- 
ents.    Sealed   with    seal,    dated     the day  of 

one  thousand  eight  hundred  and  eighty .... 

The  condition  of   the    above   obligation    is  such  that  if  the 

above    bounden heirs,    executors    or   administrators, 

shall  well  and  truly  pay  or  cause  to  be  paid,  unto  the  above 
named  Association,  its  successors   or  assigns,  the  just  and  full 

sum  of dollars,  in  the  manner   following,  viz.:  by  the 

payment  of   dues   of per on of  each 

on  each  of shares  of  the  capital  stock  of  said 

Association,  owned  by  said and  standing  in name. 

on  the  books  of  said  Association,  and  assigned  to  it  as  collateral 
security  for  the  payment  hereof,  and  on  which  this  loan  is 
based,  during  the  period  of  this  loan,  together  with  interest  on 
said  sum  of dollars,  to   be    computed  from   the  date 


212  BUILDING  ASSOCIATIONS. 

hereof,  at  the  rate  of  six  per  cent  per  annum,  and  payable  as 
follows,  at  the  expiration  of  three  months  from  the  date  hereof, 
on  the  whole  principal  sum  aforesaid,  and  at  the  expiration  of 
each  succeeding  three  months,  on  the  amount  of  said  prin- 
cipal found  to  be  due  at  the  beginning  thereof,  after  deducting 
all   previous   payments   made    on  account  of  said  principal, 

being  the  amount  of  dues  paid  on  said shares  during 

said  three  months,  as  provided  for  by  the  constitution  and 
by-laws  of  said  Association,  which  have  been  duly  assented 
to  by  said  obligor,  and  made  a  part  hereof,  without  any  fraud 
or  other  delay,  then  the  above  obligation  to  be  void,  otherwise 
to  remain  in  full  force  and  virtue. 

Provided,  however,  that  when  the  funds  of  said  Association 

shall  equal  two  hundred  dollars  per  share,  over  and 

above  all  liabilities  of  the  Association,  no  further  payments 
shall  be  required  hereon,  except  arrearages,  if  any,  and  there- 
upon a  proper  satisfaction  piece  for  the  cancellation  hereof 
and  of  the  mortgage  given  to  secure  this  bond  shall  be  duly 
executed  and  delivered  to  said  obligor, heirs,  execut- 
ors, administrators  or  assigns,    and    said .'.shares  shall 

thereupon  also  be  cancelled. 

And  it  is  hereby  expressly  agreed,  that  should  any  default 
be  made  in  the  payment  of  the  said  interest  or  any  of  said 
dues  or  installments  on  said  shares,  or  of  any  part  thereof,  on 
any  dav  whereon  the  same  is  made  payable,  as  above  expressed, 
or  should  any  tax,  assessment,  water-rent,  or  other  municipal 
or  governmental  rate,  charge,  imposition,  or  lien,  be  hereafter 
imposed  or  acquired  upon  the  premises  described  in  the  mort- 
gage accompanying  this  bond,  and  become  due  and  payable; 
and  should  the  said  interest  or  any  of  said  dues  or  install- 
ments on  said  shares   remain    unpaid    and  in   arrear   for  the 

space  of or  said  tax,  assessment,   water  rent,  or  other 

municipal  or  governmental  rate,  charge,  imposition  or  lien,  or 
any  or  either  of   them,  remain   unpaid    and  in  arrear  for  the 

space  of   then   and   from    thenceforth,  that  is  to  say, 

after  the  lapse  or  expiration  of  either  of  the  said  periods,  as 


APPENDIX.  213 

the  case  may   be,   the   aforesaid   principal  sum  of or 

the  balance  thereof  reiniining  unpaid,  with  all  arrearage  of 
interest  thereon,  shall  at  the  option  of  the  said  Association,  or 
its  legal  representatives,  become  and  be  due  and  payable 
immediately  thereafter,  although  the  period  hrst  above  lim- 
ited for  tlie  payment  thereof  may  not  then  have  expired,  any- 
thing hereinbefore  contained  to  the  contrary  thereof,  in  any- 
wise, notwithstanding. 

Sealed  and  delivered  in  presence  of 

Form  of  Mortgage  Used  by  New  Jersey  Association. 

This  indenture,  made  the day  of in   the 

year  of  one  thousand  eight   hundred   and   ninety 

Between of  the  first  part  and a  body  corporate 

of  the  State  of  New  Jersey,  located   at in  said  State, 

party  of  the  second  part: 

Whereas,  the  said j^^^stly  indebted  to  the  said  party 

of  the  second  part,  in  the  sum  of dollars,  lawful  money 

of  the  United  States  of  America,  secured  to  be  paid  by 

certain  bond   or   obligation,   bearing   even  date   with   these 

presents,  in  the  penal  sum  of dollars,lawful  money  as 

aforesaid,  conditioned  for  the  payment  of  the  said  first  men- 
tioned sum  of dollars,  lawful  money  as  aforesaid,  to 

the  said  party  of  the  second  part,  its  successors  or  assigns,  in 

the  manner  following,  viz:  by  the  payment  of  dues  of 

per on of  each on  each  of 

shares  of  the  capital  stock  of  said  association,  owned  by  said 

.-of  the  first  part,  and  standing  in name  on 

books  of  said  association,  and  assigned  to  said  party  of  the 
second  part,  as  collateral  security  for  the  payment  hereof,  and 
on  which  this  loan  is  based,   during  the  period  of  this  loan, 

together  with  interest  on   said  sum  of dollars,  to  be 

computed  from  the  date  thereof,  at  the  rate  of  six  per  cent 
per  annum,  and  payable  as  follows:  At  the  expiration  of 
three  months  from  the  date  hereof,  on  the  whole  principal 
sum  aforesaid,  and  at  the  expiration  of  each  succeeding 
three  mouths,   on   the  amount  of   said    principal,    found    to 


214  BUILDING  ASSOCIATIONS. 

due  at  the  beginning  thereof,  after  deducting  all  previous 
payments  made  on  account  of  said  principal,  being  the  amount 

of  dues  paid  on  said shares  during  said  three  months, 

as  provided  for  by  the  constitution  and  by-laws  of  said  asso- 
ciation, which  have  been  duly  assented  to  by  said  party  of  the 
lirst  part,  and  are  made  a  part  hereof. 

Provided,  however,  that  when  the  funds  of  said  association 

made shall  equal  two  hundred  dollars  per  share  over  and 

above  all  liabilities  of  the  association,  no  further  payments 
shall  be  required  hereon,  except  arrearages,  if  any,  and  there- 
upon a  proper  satisfaction  for  the  cancellation  hereof,  and 
of   said   bond,    shall   be   duly  executed  and  delivered  to  said 

party  of  the  first  part, heirs  or  assigns,  and  said 

shares  shall  thereupon  also  be  cancelled. 

Audit  is  thereby  expressly  agreed, that  should  any  default  be 
made  in  the  payment  of  the  said  interest  or  any  of  said  dues 
or  installments  on  said  shares,  or  any  part  thereof,  on  any  day 
whereon  the  same  is  made  payable,  as  above  expressed,  or 
should  any  tax,  assessment,  water  rent,  or  other  municipal  or 
other  governmental  rate,  charge,  imposition,  or  lien  be  here- 
after imposed  or  acquired  upon  the  premises  described  in  this 
mortgage,  and  become  due  and  payable,  and  should  the  said 
interest  or  any  of  said  dues  or  installments  on  said  shares're- 

main  unpaid  and  in  arrear  for  the  space  of or  said   tax, 

assessment,  water  rent,  or  other  municipal  or  governmental 
rate,  charge,  imposition  or  lien,  or  any  or  either  of  them,  re- 
main unpaid  and  in  arrear,  for  the  space  of then  and 

from  thenceforth,  that  is  to  say,  after  the  expiration  of  either 
of  the  said  periods  as  the  case  may  be,  the  aforesaid  principal 

Bum  of dollars,   or   the   balance   thereof,   remaining 

unpaid,  with  all  arrearage  of  interest  thereon,  shall,  at  the 
option  of  the  said  party  of  the  second  part,  or  its  legal  repre- 
sentatives, become  and  be  due  and  payable  immediately  there- 
after, although  the  period  above  limited  for  the  payment 
thereof  may  not  then  have  expired,  anything  therein  before 
contained  to  the  contrary  thereof,  in  anywise  notwithstanding: 


APPENDIX.  215 

as  by  the  said  bond  or  obliojation,  and  the  condition  thereof, 
reference  being  thereunto  had,  may  more  fully  appear. 

Now  this  indenture  witnosL-eth,  that  the  said  part . .  of  the  first 
part,  for  the  better  securing  the  payment  of  the  said  sum  of 
money,  mentioned  in  the  condition  of  the  said  bond  or  obliga- 
tion, with  interest  thereon,  according  to  the  true  intent  and 
meaning  thereof,  and  also  for  and  in  consideration  of  the  sum 

of  one  dollar,  to in  hand  paid  by  the  said  party  of  the 

second  part,  at  or  before  the  ensealing  and  delivery  of  these 
presents,  the  receipt  whereof  is  hereby  acknowledged,  ha. . . . 
granted,  bargained,  sold,  aliened,  released,  conveyed  and  con- 
firmed, and  by  these  presents  do. . .  .grant,  bargain,  sell,  alien, 
release,  convey  and  confirm^  unto  the  said  party  of  the 
second    part,    and    to    its    successors    and   assigns,  forever, 

all 

DESCKIPTION". 

Together  with  all  and  singular  the  tenements,  hereditaments, 
and  appurtenances  thereunto  belonging,  or  in  anywise  apper- 
taining, and  the  reversion  and  reversions,  remainder  and 
remainders,  rents,  issues  and  profits  tliereof,  and  also,  all  the 
estate,  right,  title,  interest,  property,  possession,  claim,  and, 
demand  whatsoever,  as  well  in  law  as  in  equity,  of  the  said 
part. ..  .of  the  first  part,  of,  in  and  to  the  same,  and  every 
part  and  parcel  thereof,  with  the  appurtenances:  To  have 
and  to  hold  the  above  granted  and  described  premises,  with 
the  appurtenances,  unto  the  said  party  of  the  second  part,  its 
successors  and  assigns,  to  its  and  their  own  proper  use, 
benefit  and  behoof  forever.  Provided  always,  and  these 
presents  are  upon  this  express  condition,  that  if  the  said  part 

. .  ..of  the  tirst  part, heirs,  executors  or  administrators, 

shall  well  and  truly  pay  unto  said  party  of  the  second  part,, 
its  successors  or  assigns,  the  said  sura  of  money  mentioned  in 
the  condition  of  said  bond  or  obligation,  and  the  interest 
thereon,  at  the  time  and  times,  and  in  the  manner  mentioned 
in  the  said  condition,  according  to  the  true  intent  and  mean- 
ing thereof,  that  then  these  presents,  and  the  estate  hereby 
granted,  shall  cease,  determine  and  be  void. 


216  BUILDING  ASSOCIATIONS. 

And  the  said for lioirs,  executors  and  admin- 
istrators, do covenant    and  agree,    to  pay   unto  the 

said  party  of  the   second   part, its   successors  or 

assigns,  the  said  sura  of  money  and  interest,  as  mentioned 
above,  and  expressed  in  the  condition  of  the  said  bond. 

And  it  is  also  agreed,  by  and  between  the  parties  to  these 
presents,  that  the  said  part ....  of  the  first  part  shall  and  will 
keep  the  buildings  erected,  and  to  be  erected,  upon  the  lands 
above  conveyed,  insured  against  loss  or  damage  by  fire,  by 
insurers ;  and  in  an  amount  approved  by  the  said  party  of  the 

second  part,  its  successors  or  assigns, and  assign  the 

policy  and  certificates  thereof,  to  the  said  party  of  the  second 
part ;  and  in  default  thereof,  it  shall  be  lawful  for  the  said 
party  of  the  second  part  to  effect  such  insurance,  and  the 
premium  or  premiums  paid  for  effecting  the  same,  shall  be  a 
lien  on  said  mortgaged  premises,  added  to  the  amount  of  the 
said  bond  or  obligation,  and  secured  by  these  presents,  payable 
on  demand,  with  interest  at  the  rate  of  six  percent  per  annum, 
from  the  time  of  payment  of  such  premium  or  premiums. 

And  the  said the  owner  of  the  lands  above  described^ 

for heirs    and  assigns,  do ... .  further   covenant   andj 

agree  to  and  with  the  said  party  of  the  second  part,  its  sue-' 
cessors  and  assigns,  that  they  will  not  hereafter  apply  for  any 
deduction  by  reason  of  any  mortgage  from  the  taxable  value 
of  the  lands  embraced  in  this  mortgage. 

And  it  is  further  agreed,  that  in  case  the  said heirs, 

or  assigns  shall  claim  any  deduction  from  the  taxable  value  of 
said  lauds,  in  violation  of  this  agreement,  then  and  in  that  case 
this  mortgage  shall  become  and  be  immediately  due  and  pay- 
able, and  the  amount  of  tax  paid  by  the  mortgagee  shall  be 
added  to  the  principal  of  the  debt  secured  hereby,  and  recover- 
able therewith,  with  interest  thereon  from  time  of  payment. 

In  witness  whereof,  the  said  part. . .  .of  the  first  part  ha. .  . 

hereunto  set hand  and   seal,  the  day  and  year   first 

above  written 


APPENDIX.  217 

Sealed  and  delivered  in  the  presence  of 

State  of ) 

>  es. 
County  of ) 

On  this day  of eighteen  hundred  and .... 

before  me personally  appeared who,   I   am 

satisfied, ..  ..the  mortgagor  in  the  within  mortgage  named; 

and  I  haying  first  made  known  to the  contents  thereof, 

....  did acknowledge  that signed,  sealed  and 

delivered  the  same  as voluntary  act  and  deed. 

And  the  said being  by  me  privately  examined,  separate 

and  apart  from ....  said  husband did   further 

acknowledge  that signed,  sealed  and    delivered    the 

same  as ... .  voluntary  act  and  deed,  freely,  without  fear,  threats 
or  compulsion  of said  husband. 

Form  of  mortgage  used  by  the  Mutual  Home  and  Savings 
Association,  of  Dayton,  Ohio,  which  is  the  parent  of  a  class 
of  popular  associations: 

Know    all    men   by    these    presents,    That    

in    consideration    of    dollars,    in    hand  paid, 

by  the  Mutual  Home  and  Savings  Association,  of  Dayton, 
Ohio,  ha. .  bargained  and  sold,  and  do  ....  hereby  grant,  bar- 
gain, sell  and  convey  unto  the  said  Mutual  Home  and  Savings 
Association,  its  successors  and  assigns  forever,  the  following 
premises,  situated  in  the  City  of  Dayton,  County  of  Mont- 
gomery, in  the  State  of  Ohio,  and  described  as  follows:     .... 

To  have  and  to  hold  said  premises,  with  the  appurtenances, 
unto  the  said  Mutual  Home  and  Savings  Association,  its  suc- 
cessors and  assigns  forever.     And  the  said  grantor. .  for 

and  heirs  and  assigns,  do  ...  hereby  covenant  with  the  said 
Mutual   Home  and  Savings   Association,  its  successors  and 

assigns,  that  . .   he lawfully  seized  of  the  premises 

aforesaid,  and  that  the  premises  are  free  and  clear  from  all 
incumbrances  whatsoever,  and  that he  . .  will  forever 


218  BUILDING  ASSOCIATIONiJ. 

warrant  and  defend  the  same,  with  the  appurtenances,  nnto  the 
said  Mutual  Home  and  Savings  Association,  its  successors 
and  assigns,  against  the  lawful  claims  of  all  persons  whomso- 
ever. 

Provided,   nevertheless,  and  these  presents  are  upon  this 

condition:     That,  whereas,  the  said   ha. .  entered  into 

contract,  in  writing,  with  said  association,  in  the  words  and 
figures  following,  to  wit: 

$ Dayton,  Oliio, 189 . . 

Received  of  the  Mutual  Home  and  Savings  Association,  of 

Dayton,  Ohio, dollars,  as  a  loan  on shares 

of  stock  No owned  by in  said  association. 

ao-ree  to  pay  to  said  association  weekly,  not  less 

than dollars,  which  shall  be  applied  as  follows: 

First.  To  the  payment  of  any  fines  or  other  assessments 
made  against in  pursuance  of  the  by-laws  of  said  associa- 
tion. 

Second.  To  the  payment  of  the  premium  for  precedence 
due  on  said  loan,  amounting  to dollars  per  week. 

Third.  To  the  payment  of  the  interest  due  on  said  loan, 
amounting  to   per  week. 

Fourth.  The  balance  of  said  payments  shall  be  credited  as 
dues  on  said  stock.  Said  payments  shall  be  continued  until 
the  dues  so  credited  on  said  stock,  together  with  the  dividends 
declared  thereon,  shall  equal  the  amount  loaned. 

Should  ....  fail  for  eight  weeks  to  pay  said  weekly  pay- 
ments, then  the  whole  amount  of  said  loan  shall  at  once 
become  due  and  payable. 

Now,  if  the  said shall  pay  to  said  association,  its 

successors  or  assigns,  the  said  suras  of  money  when  due,  as  set 
forth  in  said  contract,  then  these  presents  shall  be  void. 


APPENDIX.  219 

In  testimony  whereof,  tlie  said   ha. .  hereunto  set! 

, . .  . .  hand , .  tliis day  of 189 . . 


Executed  in  presence  of 


State  of  Ohio,  Montgomery  County,  ss: 

Before  me,  a  Notary  Public,  within  and  for  said  county, 
personally  appeared  the  above  named  and  acknow- 
ledged the  signing  of  the  foregoing  conveyance  to  be 

voluntary  act  and   deed,   for   the  uses   and  purposes   therein 
expressed. 

"Witness  ray  hand  and  notarial  seal,  this day  of 

A.  b.,  189.. 

Notary  Public, 

Montgomery  County,  Ohio. 

Stock  No Mortgage to  Mutual  Home 

and  Savings  Association,  of  Dayton,  Ohio. 

Borrowed,   $ Date,   Received  for  record, 

at  ....  o'clock M.  and  recorded 

in  book  ....  page  .... 


Recorder  of  Montgomery  County. 

Dayton,  Ohio I  hereby  release  this  mortgage. 

President  Mutual  Home  and  Savings  Associa- 

tion,  of  Dayton,  Ohio. 

Co-operative  Bank  Mortgrag-e  used  in  Massachu- 
setts. 

Know  all  men  by  these  presents,  that  I ,  in 

consideration  of dollars,  paid  by  the Co- 
operative Bank,  a  corporation  duly  established  by  law,  in 
,  in  the  county  of ,  and   commonwealth   of 


220  BUILDING   ASSOCIATIONS. 

Massachusetts,  the  receipt  whereof  is  hereby  acknowledged, 
do    hereby  give,   grant,  bargain,  sell    and   convey   unto    the 

said  corporation,  its  successors  and  assigns To 

have  and  to  hold  the  granted  premises,  with  all  the  privileges 
and  appurtenances  thereto  belonging,  to  the  said  corporation, 
and  its  successors  and  assigns,  to  their  own  use  and  behoof  for- 
ever. 

And hereby,  for and heirs,  execu- 
tors and  administrators,  covenant  with  the  said  grantee  and 
its  successors  and  assigns,  that lawfully  seized  in  fee- 
simple  of  the  granted  premises;  that  they  are  free  from  all  in- 
cumbrances,   that have  good  right  to  sell 

and  convey  the  same  as  aforesaid,  and   that will   and 

heirs,  executors  and  administrators  shall  warrant  and 

defend  the  same  to  said  grantee  and  its  successors  and  assigns 
forever,  against  the  lawful  claims  and  demands  of  all  per- 
sons  

Provided,  nevertheless,  that  whereas ha.  .  this 

day  pledged  and  transferred  to  the  said  corporation shares 

of  its  capital  stock,  said  shares  being  in  the series  as 

collateral  security  for  the  performance  of  the  terms,  covenants 
and  conditions  of  this  mortgage,  and  of  the  note  hereinafter 

mentioned,  upon  which  shares  said  sum  of dollars 

has  been  advanced  to by  said  corporation,  now,  there- 
fore if or heirs,  executors,  administrators,  or 

assigns,  shall  pay  unto  the  said  corporation,  its  successors  or 

assigns,  the  sum  of monthly,  at  the  stated  meet- 

ino-s  of  said  corporation,  on  the of  each  month  here- 
after, being  the  amount  of  the  monthly  dues  on  said 

shares,  and  of  the  monthly  interest  and  premium  upon  said 

loan  or  advance  of dollars,  for  which  said  shares 

are  pledged,  and  said  note  and  mortgage  given,  together  with 
all  lines  chargeable  by  the  by-laws  of  said  corporation,  upon 
arrears  of  such  payments,  until   said  shares    shall   reach   the 

ultimate  value  of  two  hundred  dollars  each,  or  if or 

heirs,    executors,   administrators   or   assigns,    shall 


APPENDIX.  221 

otherwise  sooner  pay  nnto  the  said  corporation,  its  successors 

or  assigns,  said  sum  of dollars,  together  with  the  said 

interest,  premiums  and  fines  as  aforesaid,  to  the  time  of  such 
payment,  and,  until  such  loan  shall  be  paid,  or  cancelled  by 

the  ultimate  value  of  said  shares,  if shall  pay  without 

charge  to  said  corporation,  all  taxes  and  assessments  levied  or 
assessed  on  the  granted  premises,  including  those  assessed 
upon  said  corporation's  interest  therein,  as  holder  of  this  mort- 
gage, and,  if  said  corporation's  loans  on  mortgages  of  taxable 
real  estate  shall  not  at  any  time  be  exempt  from  a  state  tax  on 

the  amount  of  its  monthly  dues,  if shall  on  demand 

pay  unto  said  corporation  such  percentage  on  the  debt  hereby 
secured,  as  it  shall  from  time  to  time  be  required  to  pay  as 
such  state  tax,  shall  keep  the  buildings  thereon  insured  against 

fire,  in  a  sum  not  less  than dollars,  for  the  benefit  of 

the  grantee,  its  successors  or  assigns,  at  such  insurance  office 
as  it  or  they  shall  approve,  or,  in  default  thereof,  shall,  on 
demand,  pay  to  said  corporation  all  such  suras  as  it  shall 
reasonably  pay  for  such  taxes,  assessments  and  insurance,  with 
interest,  and  shall  not  commit  or  suffer  any  strip  or  waste  ot 
the  granted  premises,  or  any  breach  of  any  covenant  herein 
contained,  then  this  deed,  as  also  a  note  of  even  date  herewith, 

signed  by whereby promise    to   pay   to    the 

grantee,  or  order,  the  said  sums,  at  the  times  aforesaid,  shall 
be  void. 

But  in  case  of  non-payment  of  the  aforesaid  monthly  dues, 
interest,  premium  for  fines  for  the  period  of  six  months  after 
any  payment  thereof  shall  be  due,  or  upon  any  other  default 
in  the  performance  or  observance  of  the  foregoing  condition, 
the  grantee,  or  its  successors  or  assigns,  may  sell  the  granted 
premises,  or  such  portion  thereof  as  may  remain  subject  to 
this  mortgage,  in  case  of  any  partial  release  hereof,  together 
with  all  improvements  that  may  be  thereon,  and  all  benefit 
and  equity  of  redemption  of . . .  .or . . .  .representatives  therein, 

at  public  auction,  in  said ,  first  publishing  a  notice  of 

the  time  and  place  of  sale,  once  each  week,  for  three  consecu- 
tive weeks,  in  one  or  more  newspapers  published  in  said 


222  BUILDING  ASSOCIATIONS. 

, . .  .and  may  convey  the  same  by  proper  deed  or  deeds  to  the 
purchaser   or   purchasers   absolutely,  and   in  fee  simple;  and 

such  sale  shall  forever  bar and  all  persons  claiming  under 

from  all  right  and  interest  in  the  granted  premises, 

whether  at  law  or  in  equity. 

And do  hereby,  for heirs  and  assigns,  further 

covenant  and  agree  with  the  grantee,  its  successors  and  assigns, 
that  on  such  sale, and  they  will,  upon  request,  exe- 
cute and  deliver  such  further  deeds  and  instruments  as  may 
be  necessary  or  proper  to  confirm  such  sale,  and  to  vest  the 
title  to  the  premises  sold  in  the  purchaser  thereof,  and  will 
execute  and  deliver  to  the  purchaser  an  assignment  of  all 
policies  of  insurance  on  the  buildings  upon  the  land  covered 
by  this  mortgage. 

And  out  of  the  money  arising  from  such  sale,  the  grantee, 
or  its  successors  or  assigns,  shall  be  entitled  to  retain  all  sums 
then  secured  by  this  deed,  whether  then  or  thereafter  payable, 
including  all  costs, charges  and  expenses,  incurred  or  sustained, 

by  reason  of  any  failure  or  default  on  the  part  of or  of 

representatives  to  perform  and  fulfil  the  condition  of 

this  deed,  rendering  the  surplus,  if  any,  to or 

heirs  or  assigns. 

And  it  is  agreed  that  the  grantee,  or  its  successors  or  assigns, 
or  any  person  or  persons  in  their  behalf,  may  purchase  at  any 
sale  made  as  aforesaid,  and  that  no  other  purchaser  shall  be 
answerable  for  the  application  of  the  purchase  money;  and 
that  until  default  in  the  performance  of  the  condition  of  this 

deed, and heirs  and  assigns  may  hold  and  enjoy 

the  granted  premises  and  receive  the  rents  and  profits  thereof. 

And  for  the  consideration  aforesaid,  I, wife  of  the 

said do  hereby  release  unto  the  said  grantee,  and 

its  successors  and  assigns,  all  rights  of  or  to  both  dower  and 
homestead  in  the  granted  premises. 


APPENDIX.  223 

In  witness  whereof, the  said hereunto 

set hand  and  seal,  this day  of in  the 

year  one  thousand  eight  hundred  and 

Signed,  sealed  and  delivered  in  presence  of 
Commonwealth  of  Massachusetts ss 18 . . 

Then  personally  appeared  the  above  named and 

acknowledo-ed   the  foregoing  instrument   to   be free 

act  and  deed,  before  me, Justice  of  the  peace, 

18. .,  at o'clock  and minutes, M. 

Keceived  and  entered  with Deeds,  libra folio 

attest: 


,  Kegister. 


224 


BUILDING  ASSOCIATIONS. 


Form  of  Stock  Register. 

Bj  adding  enough  weeks  downward  to  constitute  a  year, 
the  stockholder's  account  with  the  association  appears  in 
compact  form,  and  like  columns  may  be  increased  to  the 
right,  next  to  the  "Total"  column,  and  the  latter  will 
prove  the  footings.  If  the  accounts  are  to  be  cast  up  but 
once  a  year,  this  form  may  easily  be  adapted,  by  omitting 
the  six  months'  summary,  or,  if  the  association  declares  no 
dividends,  that  much  of  the  form  may  be  omitted.  This 
form  is  used  by  permission  of  Mr.  L.  G.  Dynes,  its  inventor. 


M 

O) 

a> 

^ 

.a 

a 

o 

o 

^ 

^ 

Balances. 


May 


Jun. 


July 


Auff 


Sep. 


Oct 


7 

14 
21 
28 

4 
11 
18 
25 

2 

9 
16 
2i 
30 

6 
18 
2'i 
27 

3 
10 
17 
24 

1 

8 
15 
22 
29 

Totals, 


Book 
No. 


Ent. 

and 
Trans. 
Fees. 


NAME  OF  STOCKHOLDER. 
Address 


Cr. 


Dues. 


Prem 


Int. 


Fines 

and 

Disc'ts 


No. 
Shares 


Dr. 

(Loan) 
(Pay- 
ments) 


Totals. 


Balance,  $ 

Dividend,  Total,  S 

..percent.  Current  Term,  S ,    . 

The  association  will  only  need  to  keep  an  expense  accoont  m  addition  to  the  above. 


APPENDIX. 


225 


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226  BUILDING  ASSOCIATIONS. 

Form  of  Building  Agreement. 

Articles  of  agreement.     It  is  hereby  mutually  agreed,  this . . 

day  of ... .  189 . .  by  and  between part . .  of  the  fii-st  part, 

and part.. of  the  second  part,  all  of  Marion  County, 

State  of  Indiana,  as  follows,  to  wit: 

Part ....  of  the  second  part,  for heirs,  executors  and 

administrators,  hereby  covenant ....  and  agree. ...  to  and  with 
said  part ....  that ....  will  erect,  construct  and  fully  complete 
in  a  good,  substantial  and  workmanlike  manner,  on  or  before 

the day  of 189 . .  for  the  consideration  hereinafter 

named,  the  following  described  improvements  upon  the  rea} 
estate  described  in  the   specitications   hereto  attached,  to  wit: 

in  the  manner,  in  all  respects,  set  forth  in  the  plans 

and  specifications  hereunto  attached  and  made  a  part;  that 
second  party  shall  furnish,  at  his  own  expense,  all  the  labor 
and  material  used  in  such  erection,  construction  and  comple- 
tion of  said  improvements,  and  will  carry  a  builder's  insurance 
risk  on  same  while  in  progress;  in  consideration  for  all  which 
the  party  of  the  first  part  hereby  agrees  to  pay  unto   second 

party  the  sum  of dollars,  in  the  manner  following,  to 

wit: Provided,  that  second  part ....  shall  have 

fully  paid  for  all  material  and  labor  furnished  to  date  of  pay- 
ment, so  that  there  shall  not  be  a  lien  therefor  on  the  said  real 
estate;  that  second  party  shall  execute  a  bond  in  the  suhi  of 

dollars,  with  sureties  to  the  satisfaction  of  first  party 

and mortgagee,    conditioned  to   idemnify  first  party 

and mortgagee  from  loss  bv  reason  of  mechanics  liens. 


"O    o 


It  is  further  mutually  agreed  by  and  between  the  partiea 
hereto,  that  the  said  plans  and  specifications  shall  co-operate; 
that  is  to  say,  that  any  work  or  works  set  forth  in  the  plans, 
and  not  mentioned  in  the  specifications,  and  vice  versa,  are  to 
be  executed  as  fully  as  though  set  forth  in  both  the  plans  and 
specifications. 

That  nothing  shall  be  built,  erected,  charged  and  paid  for  as 
extras,  until  after  all  agreements  in  relation  thereto  have  been 


APPENDIX.  227 

first  reduced  to  writing  and  signed  by  the  parties  hereto;  that 
first  party  shall  not  be  liable  for  any  damage  that  shall  occur  to 
any  part  of  said  work  and  improvements  and  to  any  person  or 
persons  employed  in  or  about  said  premises ;  that  second  party 

....  shall  pay  unto  first  party ....  the  sura  of dollars 

per  day  for  each  day  the  completion  of  said  improvements 
shall  be  delayed  beyond  the  date  hereinbefore  fixed  for  their 
completion;  that  first  party. . .  .shall  have  the  right  to  control 
the  location  of  closets,  mantels,  shelves,  brackets,  chandeliers, 
bracket  lights,  stove  pipe  holes  in  flues,  and  colors  of  paint, 
beyond  those  mentioned  in  the  specifications;  and  that  first 
party. . .  .shall  not  be  responsible  for  any  material  and  labor 
used  in  the  improvements  aforesaid 

In  witness  of  all  which,  the  parties  have  hereunto  sot  their 
hands  on  the  day  and  date  hereinbefore  written. 

First  party. 

Second  party. 

Form    of  Building   Specifications, 

Specifications  for  improvements.    Specifications  for  improve- 
ments on  the  following  described  real  estate,  situated  in 

County,  State  of 

Excavation,     a.     Outside  trenches.  ...inches  deep.     b. 
Cellar by feet  in  size,  and. . .  .feet  deep  in  the  clear. 

Foundation,     a.     Quality  of  brick , inches 

in  ground  and inches  above  ground, inches  thick; 

outside  walls  of  cellar  to  be  nine  inches  thick,  and  inside  walls 
to  be  four  inches  thick,  b.  The  studding  shall  rest  upon  tim- 
bers placed  upon  foundation  of  dimensions  and  constructed  as 

follows:   c.     Yentilators  of in  foundation 

shall  be  used  as  follows:   d.     Piers  will  be  used  as 

follows:    and  of  following  dimensions:     

Joists,     a.     Quality,    and   kind   of   timber b. 

Dimensions  of  joist  shall  be by inches,  placed 

inches  from  center  to  center,  with rows  of  truss  brido-- 

ing,  and  joists  shall  be  accurately  sized  at  the  top.     c.     Second 


«_)28  BUILDING  ASSOCIATIONS. 

story  joists  shall  be ....  by inches,  placed inches  from 

center  to  center,  with ....  rows  of  truss  bridging,  and  accur- 
ately sized  both  at  top  and  bottom,     d.     Joists  shall  be  spiked 

with penny  nails,  and  bridging  nailed  securely  with 

penny  nails,     e.     Studding  shall  be  double  at  all  corners  and 
all  openings. 

Studding",  a.  Quality  and  dimension  of  studding,  b. 
How  fastened  at  top.  c.  Kind  of  nails  and  how  many  used 
in  spiiving  studding,     d.     How  far  from  center  to^center. 

Rafters,      a.     Quality    and    dimensions    of    rafters,     b. 

Eafters  shall  be  placed -inches  from  center  to  center. 

c.     Pitch  shall  be. . . .     d.     Rafters  shall  project inches ' 

outside  of  outer  walls,  and  shall  be  finished  as  follows: 

Lining',     a.     Paper  of quality,   and   fastened  as. 

follows,     b.     Timber  as  follows and  put  on  diagonally, 

in  following  manner,  with penny  nails  in  each  stud- 
ding. 

Weatherboarding.    a.     Quality  and  kind  of  weather- 

boardino-  shall  be and  securely  nailed  to  each  studding| 

with  one. . .  .penny  nail ;  free  from  windshakes,  bad  knots  and 
placed. . .  .inches  to  the  weather,     b.     Corner  boards  shall  be 

of lumber ....  by inches,     c.     The  finish  around  the. 

doors  and  windows  shall  be  as  follows: 

Porticoes,     a.     Shall   be  built,  having  turned   columns 

resting  upon  iron  stands,  piers by inches;    

feet  wide,  and   with roof,  necessary   brackets   and    scroll 

work,  shall  be  built  as  follows: 

Roof.     a.     Sheathing  shall  be . . .  .inches  apart,  nailed  with 

penny  nails  in  each  rafter,  and  shall  be  of  lumber  des- 

cribed    as   follows,     b.     Shingles   of ..quality,   placed 

inches  to  weather,  and  nailed  with  two penny  nails 

to   each  shingle,      c.     Comb  boards  of   following  kind   and 
quality: 


APPENDIX.  229 

Floors,  a.  Kind  and  quality  of  flooring  shall  be  as  fol- 
lows   and  each  plank  shall  be  nailed  to  each  joist  with 

. . .  .penny  nails.  . 

Windows,     a.     Frames  shall  be  of  following  description. 

b.  Sash  of  following  description    will  be  used.     c.      Glass 

shall  be  of  doable  strength  and  of  following  dimensions 

fastened  with  tin  points  and  well  puttied,  d.  Weights,  cords, 
pullies  and  locks  will  be  put  on  all  windows,  except 

Doors,  a outside  doors,  of ... .  style  and  of  fol- 
lowing size  and  description b inside  doors 

of panels  and  of  following  size  and  description  will  be 

used.  c.  Transoms  of  following  size,  and  hung  on  pivots, 
will  be  used  over  each  door,  (except  closet  doors),  d.  Hard- 
ware for  doors  will  be  of  following  kind  and  sizes,  e.  Bump- 
ers will  be  provided  for  each  door. 

Plastering,     a.     Lath  of quality  shall  be  used.     b. 

....  coats  of  brown  mortar,  made  of lime,  best  hair  and 

sharp  sand,  shall  be  put  on  with  true  surface  and  corners,  b. 
One  skim  coat  of  white  shall  be  put  on  the  brown  coat  (when 
dry),  with  like  accuracy  of  surface  and  corners. 

Finish,  a.  Kind  and  quality  of  lumber  for  inside  finish 
shall  be  as  follows:      b.     Style  of   finish  shall  be 

c.  Baseboard  shall  be by inches,  with moulding 

on  top  and  quarter  round  on   floor,     d.     Finishing  shall    be 

- ...  by inches  round  each  door  and  window,  with 

moulding  as  follows e.     Picture  moulding   shall 

be  put  in  the  following  rooms: 

Closets,  a.  Where  placed  and  dimensions,  b.  Doors 
of  following  kinds  shall  be  used  for  each  closet,  to  wit. 
c.  Shelves  shall  be  placed  in  each  closet  as  follows,  d.  Closet 
hooks  of  best  quality  shall  be  placed  in  each  closet. 

Pantry,  a.  Shelving,  b.  Bread  box  of  following  con- 
struction shall  be  provided,  c.  Other  furnishings  for  pantry 
shall  be  as  follows. 


230  BUILDING  ASSOCIATIONS. 

Staii'Avays.  a.  Location  and  kind  of  finish,  b.  Ban- 
isters shall  be.  c.  Newel  posts  shall  be.  d.  Landings. 
e.  Manner  of  construction  shall  be.  f.  Stairway  for  cellar 
shall  be  constructed  as  follows: 

Plumbing'.  Shall  be  put  in  as  follows,  and  of  best  ma- 
terial and  workmanship: 

Tinwork.  Shall  be  as  follows  and  of  best  quality  of  tin 
for  long  wear: 

Paint,     a coats  of  best  boiled  linseed  oil  ^and  best 

brands  of  lead,  of   color  to  suit  owner,  for  outside,     b 

coats   of for  all   inside   finish,   after    finish    has   been 

thoroughly  sandpapered,  except,  c.  Eoof,  tinwork  and  comb 
boards  shall  be  painted  with  two  coats  of  paint. 

Flue.  a.  Shall  be  located  as  follows:  b.  Brick  shall 
be  of  best  hard  burned  where  exposed  to  the  weather,  with 

foundation  thereof  resting  on  ground,  starting inches 

below  surface,  well  plastered  on  the  inside,  and  provided  with 
holes  for  stove  pipe  and  best  sheet  iron  thimbles  and  tin  caps 
wherever  directed  by  owner;  all  flues  and  chimneys  to  extent 

feet  above  roof,  and  well  supplied  with  tin  flashings,  to' 

prevent  leaks  where  they  pierce  the  roof. 

Ventilators.     Shall  be  made  of  ornamental  scroll  work 
. . .  .by . . .  .inches  in  size  and  placed  as  follows: 

Ornamental  Scroll  work  shall  be  placed  as  follows  and 
of  following  description: 

Outside  steps  at  each  outside  door  shall  be  constructed  as 
follows: 

Outside  door  and  stairway  to  cellar  shall  be  constructed 
as  follows: 

Fencinar.     a.     Picket,     b.     Tight  boards,    c.     Paint. 


APPENDIX.  231 

Well.     a.     Kind.     b.     Furnishings. 

Cistern,  a.  Size.  b.  Furnishings,  c.  Connection 
with  down  spout,     d.     Overflow  pipe. 

Sink.     a.     Kind.     b.     Covering. 

Outbuilding's,  a.  Kind.  b.  Kind  and  quality  of 
material  to  be  used  therein,  c.  Size.  d.  Foundation. 
e.  Hoof.  f.  Paint,  g.  Vault  shall  be. ..  .feet  deep,  and 
walled  with  whole  brick,  burned  sufficiently  hard  not  to 
crumble.     Its  location  shall  be 


Extras. 


Plans  for  buildings  for  which  the  foregoing  specifications 
are  made  are  as  follows: 

Form  of  Indemnifying^  Bond  Against  Liens. 

Know  all  men  by  these  presents,  that  we of  Marion 

County,  and  State  of  Indiana,  are  held  and  firmly  bound  unto 

the association  of  Marion  County,  Indiana,   in   the 

sum  of ....... .dollars,  to  be   paid  to  said  association,  well 

and  truly,  we  bind  ourselves,  our  heirs,  executors  and  admini- 
strators, firmly  by  these  presents.  Sealed  with  our  seals  and 
dated  the day  of A.  D.,  18 

The  conditions  of  this  obligation  are  such,  that  whereas, 

the  above  bounden ha. . .  .heretofore  entered  into  a 

contract  with the  owner  of  certain  real  estate  in 

County,  Indiana,  to  make  certain  improvements  thereon,  which 
real  estate  is  described  as   follows,  to- wit 

And  whereas,  said  association  has  agreed  to  lend  the  owner 
of  said  real  estate  S with  which  to  make  said  improve- 
ments, such  loan  to  be  secured  by  a  first  mortgage  upon  said 
i-eal  estate. 

Now,  therefore,  should  said  obligors,  their  heirs,  executors, 
administrators,  successors  and  assigns,  construct  and  fully 
complete  according  to  contract,  said  improvements,  in  all  their 


232  BUILDING  ASSOCIATIONS. 

parts,  in  a  manner  satisfactory  to  the  owner  of  said  real  estate, 
and  to  the  board  of  directors  of  said  association,  and  furnish 
and  pay  for  all  materials  of  every  description  used  in  improv- 
ino^  said  real  estate,  and  fully  pay  all  salaries,  wages,  compen- 
sations and  moneys,  which  are  or  hereafter  may  be  due  and 
owing  to  any  and  all  employes  and  laborers,  who  have  been, 
now  are,  or  hereafter  may  be  employed  upon,  about  or  in  con- 
nection with  said  improvements,  and  keep  and  preserve  said 
premises  free  from  any  liens  for  materials  furnished,  or  work  and 
labor  done;  or,  in  case  any  such  lien  or  liens,  be  taken  against 
said  real  estate,  should  said  obligors  cause  each  lien  so  taken, 
to  be  satisfied,  removed,  released  and  fully  discharged,  within 
thirty  days  from  the  filing  of  such  lien,  and  hold  and  save  said 
association  harmless,  by  reason  of  such  improvement  of  said 
real  estate,  or  by  reason  of  any  loss,  damage  or  injury  grow- 
ing out  of,  or,  directly  or  indirectly,  resulting  therefrom,  so 
that  said  mortgage  shall  be  and  remain  a  first  lien  npon  said 
real  estate,  then  this  obligation  shall  be  void  and  of  no  effect; 
otherwise,  it  shall  remain  in  full  force. 

These  obligors  hereby  agree  that  changes  and  additions,  if 
any,  in  said  contract  for  improvements,  shall  not  operate  to 
release  them  herefrom,  but  this  bond  shall  apply  to  such  addi- 
tions and  changes,  if  any,  to  the  same  extent  that  it  would 
apply  were  they  in  existence  at  this  time. 

The  said  obligors  hereby  agree,  jointly  and  severally,  to  pay 
said  several  sums,  and  to  perform  all  the  conditions  of  this 
bond  and  of  said  mortgage,  and  to  pay  ten  per  cent  attorneys' 
fees,  upon  any  sum  which  may  be  recovered  upon  this  bond, 
all  without  any  relief  from  valuation  or  appraisement  laws. 

Signed  and  delivered  in  presence  of    ) 


[seal] 
[sp:al] 
.  [seal] 


APPENDIX.  233 

State  of ) 

>6S. 

County  of ) 

,  being  duly  sworn  upon  oath  says;  that  he  is 

the  person  who  signed   the  attached   indemnifying  bond    as 
surety  thereon;  that  he  is  the  owner  in  hia  own  name  and 

right,  of  unincumbered  real  estate,  situated  in County, 

State  of  Indiana,  worth  double  the  penalty  of  the  attached 
bond,  over  and  above  all  debts,  liens   and  exemptions  of  law. 

Subscribed   and  sworn  to  before  me,  this day  of 

........A.  D.  189.. 


.Notary  Public. 


(Note. — An  exemption  as  allowed  by  law  should  be  exclusive 
of  the  sworn  valuation.  The  surety  should  be  worth  double 
the  penalty  of  bond.     Write  in  ink.") 

Form  of  Contractor's  Waiver  of  Liens. 

189.. 

To  the Association:     In  consideration  of  the 

loan  of  $ , made  by  you  to on   the   following 

real  estate  in County,  State  of ,  to  wit:   .... 

I,  as  contractor,  for  making  improvements  on  said  real  estate, 
agree  to  waive  any  claim  or  right  I  may  have  to  take  or  hold 
any  mechanic's  lien  on  said  real  estate,  or  the  building  or  build- 
ings to  be  placed  thereon,  and  I  agree  to  idemnify  you  against 
any  lien  for  labor  done  or  material  furnished  to  make  said 
improvements. 


State  of   .... 
County 


'  [ss. 


being  duly  sworn,  on  his  oath  says  that  the  fol. 

lowing  is  a  complete  list  of  the  persons  who  have  performed 
any  labor  or  furnished  any  material  in  making  the  improve- 
ments on  the  real  estate  belonging  to and  described 


234  BUILDING  ASSOCIATIONS. 

in  the  above  agreement,  and  I  authorize  the Associa- 
tion to  pay  said  persons,  out  of  the  loan  made  by 

from  said  association,  the  amounts  due  them  severally,  to  th© 
extent  of  said  loan: 


NAME.  I  WHAT   FOR.  |      AMOUNT. 

I  I 

Signature 

Subscribed   and   sworn   to   before  me   this day  of 

189.. 

N.R 


I  authorize  said Association  to   pay,  out  of  a 

loan  made  by  me  from  it,  amounts  due  contractors,  sub-con- 
tractors, laborers,  or  for  material  as  per  list  furnished  by. . . . 
as  above.     Witness Signature 

Form  of  Sub -contractor's  Waiver. 

"We  severally  acknowledge  the  receipt  of  the  amounts  set 
opposite  our  respective  names,  for  work  done  or  material  fur- 
nished for  building,  on  lot County,  State  of 

being  on street side,  between 

and streets,  for being   property   upon   which 

the Association   has  made   a  loan   of  $ 

And  we  hereby  certify  that  no  part  of  the  material  furnished 
or  work  done  was  for  or  on  any  other  property.  And  we  here- 
by release  all  our  rights  to  a  mechanic's  lien  on  said  real' 
estate,  or  improvements  thereon,  for  any  amount  now  or  here- 
after to  become  due. 


NAME.  WHAT    FOR.  AMOUNT.  RECEIPT. 


General  form  of  Bond  for  Secretary. 

Know  all  men  by  these  presents.  That as  principal 

and as  surety,  are  held  and  firmly  bound  unto  the 


APPENDIX.  235 

Association,  in  the  penal  sum  of dollars,  to 

pay  which  thej  bind  themselves,  their  heirs,  executors  and 
administrators,  firmly  by  these  presents. 

The  conditions  of  this  obligation  are  such,  as  that,  whereas, 

on  the day  of. .. .. .  ...189. .,  the  said was 

duly  elected  secretary  of Association  aforesaid,  by  the 

directors  thereof. 

Xow,  therefore,  if  the  said shall  faithfully  perform 

his  duties  as  such  secretary,  during  the  term  for  which  he  was 
elected,  and  during  any  succeeding  term,  until  his  successor  is 
duly  elected  and  qualified,  as  such  duties  are  now,  or  hereaf- 
ter may  be  imposed  by  the  by-laws  of  said  association,  andl 
during  such  time  shall  faithfully  and  accurately  account' 
for  all  moneys,  books,  notes,  mortgages  and  other  instru- 
ments of  indebtedness,  in  favor  of  said  association,  and 
upon  surrendering  his  said  office,  deliver  to  his  successor  in 
office,  all  money  or  other  property  of  value  in  his  hands,  as 
such  secretary,  belonging  to  the  said  association,  then  this 
bond  to  be  void  and  of  no  effect  whatever;  otherwise  to  be  and 
remain  in  full  force  and  effect  in  law. 

In  witness  whereof,  we  have  hereunto  affixed  our  hands  andi 
seals,  this day  of A.  D.,  189.. 


,  [seal.]  . 
[skat..]  , 


General  form  of  Bond  for  Treasurer. 

Know  all  men  by  these  presents,  That as  principal 

and as  surety,  are  held  and  firmly  bound  unto  the 

Association,  in  the  penal  sum  of dollars,  to  pay  which 

they  bind   themselves,  their  heirs,  executors  and  administra- 
tors firmly  by  these  presents. 

The  conditions  of  this  obligation  are  such,  as  that,  whereas, 

on  the day  of 189 . .  the  said was  duly  elected,' 

treasurer  of  the  said  association. 


236  BUILDING  ASSOCIATIONS. 

TTow,  therefore,  if  the  said shall  faithfully  perform 

his  duties  as  such  treasurer,  during  the  term  for  which  he  was 
elected,  and  for  any  succeeding  term,  until  his  successor  is 
duly  elected  and  qualified,  as  such  duties  are  now,  or  hereafter 
may  be  imposed  by  the  by-laws  of  said  association,  and  during 
such  time  faithfully  and  accurately  account  for  all  moneys, 
books,  papers  and  other  property  belonging  to  the  said  associa- 
tion in  his  hands  as  such  treasurer,  and  upon  the  surrender- 
ing of  his  office,  deliver  to  his  successor  all  moneys  and  other 
property  in  his  hands  as  such  treasurer,  then  this  bond  to  be 
void  and  of  no  effect  whatever;  otherwise  to  be  and  remain  in 
full  force  and  effect. 

In  witness  whereof,  the  said and have  here- 
unto set  their  hands  and  seals,  this day  of 

A.  D.   189.. 

[seal.] ,  . 

[seal.] 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

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